Skip to main content

tv   U.S. Senate  CSPAN  February 18, 2011 12:00pm-5:00pm EST

12:00 pm
at political processes and politically negotiated settlements. i think more weapons, the more it will complicate the more strategic level objective i think moving towards a politically negotiated settlement. the other interesting thing that came out is a discussion, the real need for the u.s. to i think clearly articulate what its position is. there's a lot of questions about this. again, hamish mentioned, when you're in afghanistan, the theories of what do we want to be there. the very senior level afghans, cabinet level afghans will tell you believing that we are really there, we are there backing the taliban, arming the taliban because we need them there to justify this long-term because we really want long-term basis there or to steal their resources. or whatever the reasons are.
12:01 pm
but this lack of clarity on what our clinical objective is and what our position is regarding the negotiated settlement i think is very damaging right now. but that does create tension why think the u.s. needs to articulate the position, but what the u.s. may find right now is this has to be afghan lead and led by the afghan government. again, we've heard from many the afghan government is the number one problems of fueling the insurgency. they are a party to the conflict. so are they actually the right body to believe the process? i think just a real tough issue there that needs to be dealt with, but also get a urgency for the u.s. i think to clarify what its position is. i think the issue of the withdrawal of troops, we didn't talk about that too much, but it is certainly one of the key demands of the taliban. and yet there's a tension there where lisbon in the context of
12:02 pm
the transition, the transition of the afghan national securities lead, but didn't immediately clarify that there'll be long-term strategic partnership agreements. we'll be hearing about that more in the next few weeks i think about longer-term commitment. nato secretary-general also talk about longer-term commitment and you know a bit of ambiguity about 2014, exactly how matrix do stay behind. it seems to be clear there is a brand for troops to stay behind, not least of all the afghan, the afghanistan national security, there is no air force. it would be an importantly important role. i think the issue i think is going to be interesting in how that is resolved, demand for withdrawal of troops and get increasing signals that we don't plan to withdraw. and then lastly i think the
12:03 pm
issue of the afghan national security forces, which a real push in terms of numbers now, and yet it seems pretty clear from the current fiscal and five in this town that the sustainability assumption seems to be a bit of a stretch. we had good meetings in kabul with the general caldwell and his team are doing excellent work but they're also very explicit that the systemic cost cost of the nsf are about $8 billion a year. and where is that going to come from? so are we creating these institutions that are completely unrealistic in this context? and given the context as a troops withdraw, the appetite for funding these things is going to also decrease. we're seeing that in the right. for everyone american troop could pay for -- the fact of the matter is the american congress
12:04 pm
is much better to pay for one american troop. but also just the amount of resources that is invested into building the afghan national see kitty forces relative to civilian institutions. and again, this problem that you don't need to look too far in the region to see what did he stabilizing consequences, and so question i think is also the umbrella of isaf starts to move away, how will the afghan national army in particular be perceived? we know the afghan national police is not too terribly will proceed. it has been so closely linked to isaf that i wonder will the perception of the ethnic imbalance really come to the floor, and could the exit strategy which were hinging quite a bit on actually
12:05 pm
potentially become a decisive force if it ethically or in terms of military imbalance. so again just to highlight some other topics and some of the points that were touched on, but i would just like to conclude by thanking again the panelists for really a rich rich presentation. survey on what i think is i think the most important issue confronting the u.s. afghanistan into day. .. [inaudible conversations]
12:06 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> the president is traveling to oregon today to take a tour and make remarks.
12:07 pm
a semiconductor manufacturing facility. he will speak about jobs and the economy today at 2:35 p.m. eastern and we will bring you his remarks live here on c-span2. >> it is a three day presidents day weekend on book tv on c-span2. on afterwards, hurd 1966 interview with dr. martin luther king jr. launched the career of carole simpson. her story of climbing the ranks of what was a profession dominated by white males. also this weekend we examined the way governments are using the internet to maintain political power. stephanie koontz looks at the feminine mystique and the birth of the women's movement to beat find a complete three day holiday schedule at book tv. sign up for book tv alert. >> this monday visit the public and private spaces of america's most recognizable homes, the white house, the original
12:08 pm
documentary provides a rarely seen look at the history of the presidential residence and takes you through the mansion, the west wing, of all office, and lincoln bedroom and focuses on the presidents and first families who have most influence how it looks today, airing in high-definition and newly updated with interviews with president obama and the first lady and comments from georgia and laura bush. the white house, inside america's most famous of this monday at 6:00 p.m. eastern on c-span. >> donald ross felt was built the youngest and oldest person to serve as u.s. defense secretary. >> u.s. proximity, you automatically have an obligation to tell him the truth and what you really believe. people who don't have proximity and only go in and see him occasionally simply don't want to do it. >> sunday he will discuss his philosophy a presidential staff, the process of writing his memoirs, and address some of
12:09 pm
the books critical and positive reviews on c-span q&a. >> the senate agriculture committee held a hearing thursday with agriculture secretary tom vilsack looking at economic issues, followed by a panel of witnesses including the president of the to reserve bank of kansas city and michigans agriculture director, two hours and 20 minutes. [inaudible conversations] >> well, good afternoon. i am going to call the meeting to order for the senate agriculture, nutrition, and forestry committee. we do need to conduct some business. at the point which we have a quorum we will stop and do that, but i do want to indicate that it is a great honor and privilege for me to be here today as the new chair of this committee and beginning this
12:10 pm
first in the hundred and 12th congress. very proud to welcome our colleagues, new colleagues to the committee. we are, i think, starting in a very important place which is talking about jobs in the economy. 15 million jobs, that is the estimate of the total number of americans out of a job because of american agriculture. that is why we are here today. that is a big deal for american families. i am very proud, as you know, to represent the state of michigan where we know how to grow things and build things. we do that and are very proud of it. agriculture represents more than $70 billion of our economy each year and represents one of four jobs in michigan. that is why i am very pleased that senator roberts and i agreed that we should look at the impact of american agriculture and our economy, how
12:11 pm
important it is in terms of jobs, because it is really a story that is not old enough and a story that we are going to repeat throughout this congress. as i mentioned, senator robert and i agreed to this because certainly he understands the importance of agriculture and creating jobs. i am very pleased to be working with our new ranking member, my friend, senator roberts. i want to thank him for being here today and representing the great state of kansas where i no there are at least 300,000 jobs that come from agriculture. center robert and i both served in the house, a great champion and chairman and the house and now serving with him in the senate is a real honor with me as well as serving with all of you. the senate agriculture committee has always been a bipartisan committee. that is one of the things that we all enjoy about it. we put the interest of producers and rural america and our nation
12:12 pm
above politics that occurs around here, and i look forward to continuing that tradition as we move forward in this congress. as i mentioned, today's hearing focuses on jobs and agriculture and rural communities. i would like to extend a warm welcome to secretary tom vilsack, who will be our first witness. also welcome our second panel, and i want to indicate i'm very pleased that keith creagh, our new director of the michigan department of agriculture and rural development will be testifying on the second panel. i suspect that many of you have read the same report that i have been reading. rarely have we seen a more positive outlook for the agricultural economy as a whole. this should come as no surprise to any of us, american farmers and ranchers produced the safest, most nutritious and most sustainable agricultural products in the world. we know this, and the rest of the world does as well. in fact, one of the biggest
12:13 pm
success stories in our nation's economy is the strength of our farm exports. for the second year in a row agricultural exports have been projected to be over a hundred billion dollars. this year we expect to see a record high of 1,206,000,000,000 in exports, and, in fact, agriculture is among very few industries are we enjoying a trade surplus. this is welcome news for our economy. here is more good news. agricultural exports will support over 1 million jobs this year alone. these jobs are not just on the farm, but in towns and cities all across the country. i know that each of our members on the committee here today have a similar story to tell about the importance of agriculture in each of your states in terms of the economy and jobs. as we listen to our witnesses, let's keep those 16 million americans in mind who are counting on us to continue to
12:14 pm
give them the opportunity to be successful. it is now my great pleasure to yield to the distinguished ranking member, senator roberts, for his opening remarks. >> it is a true privilege and an honor to serve as ranking member of this committee. basically senator chambliss served as the top gone on our side for the last six years. as i quickly note, i am on page three instead a page one. but to pay homage where homages do. thank you, madame chairwoman. [laughter] >> all right. it's about time. >> this business, i don't know about that, but i will do my very best. as i have said before, the high road of humility is not often bothered by heavy traffic in washington, but it is a very
12:15 pm
humbling experience and an honor and privilege. my congratulations on taking the gavel for the agriculture committee. i'm honored to be riding shotgun with you. this committee conducts oversight of the 2008 farm bill and the dodd-franc act and investigates overburdensome regulations on the log -- long-delayed trade agreements and prepares for the next farm bill. that is a lot of farm bills. kansas and michigan have much in common in regard to the crops we grow. you do have something called specialty crops, big-time. additionally, i look for to learning about the diversity you all have in production, crops like asparagus and berries. i even like asparagus. i understand you all have a pretty tasty wine in michigan, too. when the hour is late and we have difficulty, maybe you could write that out. michigan has over
12:16 pm
19 million acres of forest land. that is a lot of forest land. kansas, i'm talking about western kansas best of highway 81, we have 19 trees. [laughter] we call them invasive species. [laughter] now back to my original page. it is a true privilege and honor to serve as ranking member. senator chambliss served as the top gun for the last six years. he is taking on the yeoman work as the ranking member of the intelligence committee. i want to thank sax before his tireless, especially during the 2008 farm bill. i could go down the line. former chairman and ranking members to continue to service to many, luther, cochrane, leahy , former secretary of agriculture. i feel compelled to pay homage to mr. conrad who has paid a very key role in every farm bill i have been involved with.
12:17 pm
the unprecedented depth of knowledge and experience on this committee i think it's unprecedented this time around. i think it will serve all of agriculture and rural america well. i also welcome two new members to the committee, senator levin from north dakota and senator bozeman from arkansas, the agriculture committee is not often the first choice for new members, but we are fortunate to have your enthusiasm and expertise on board. he made a wide choice. you will find this committee is a bit different than others and that he will work as much from members from the other side of the table as the side. my experience with agriculture, i found this committee on more occasions than not is a fine example of bipartisanship and, the. those are not just words. those are but we have to do. we must work together because too often agriculture programs become the target of criticism that the tax. our farmers and ranchers to produce the safest, most abundant and affordable food and fiber supply in the world.
12:18 pm
that "has been said virtually by everybody on the committee and by tom harkin at least 17 times -- 18 times. that if these challenges aren't enough art producers face a challenge of worldwide significance. let me remind all members, as the global population of the world tops 9 billion, probably in the next several decades agriculture production must more than double to meet the expected demand for food and nutrition. that, to me, is the key issue that we must face, and it is a moral issue. it is an issue of national security and it is an issue of world stability. all you have to do is look at the conflagration going around the world today with many people suffering from malnutrition and starvation. i think you can get the message. so as ranking member, i am going to of work to ensure our producers have the tools and necessary protection to meet
12:19 pm
this challenge. why would we do anything given that imperative that would be harmful to the men and women whose job it is to feed this country in a troubled and hungry world? i really think we have to bear down and do our oversight and hallmark to make sure that does not happen. today's hearing focuses on agriculture's contribution to our national economy. i appreciate our witnesses that are providing their perspective. mr. secretary, welcome back to the committee. i understand this is round two for you today. i think on the house side our friends on the other side of the health treated you well. you don't look any worse for wear. you look fine, sir. i also think mr. katie from the kansas city federal reserve for testifying on our second panel. those of you who can stay to hear tom, i would encourage you to do that. there is a story written about somebody who has a profile in courage it would be thomas
12:20 pm
hoenig. this afternoon we will hear many positives about the current state of agriculture. as everybody knows, prices are up to historical levels. the sun is shining. maybe not in kansas, but the sun is shining. any farmer in kansas or michigan or iowa or even vermont who has spent more than two weeks in the field can tell you prices can change just as quickly as the weather. we on the authorizing committee must be mindful of that fact, especially as we move into future debates on the safety net. madam chairman, i think you for calling this hearing and look for to hearing that only when our panelists have to say today by working with you to drive an agricultural policy in the 112th congress. thank you, ma'am. >> thank you very much, senator roberts. just a follow up on one thing you said, this is an extraordinary committee when i look around at the expertise, the chairman and other committees, former chairman and,
12:21 pm
this really is an opportunity in this congress for us to really lead and provide expertise as it relates to developing a farm bill that really works for our agriculture and the country. senator leahy, you wanted 30 seconds. >> test to congratulate you, madame chairwoman, in being. this committee was my first choice when i came here 37 years ago. i have served on it during that time, the chair car rankings. i am delighted you are here with that no hall. how did you work to put together a bipartisan coalitions. roberts is correct when he says he is also the only person who served both as house chairman and now as senate ranking member. he and i worked very close together. you are absolutely right. we work across party lines for the good of agriculture.
12:22 pm
so i am just delighted to see both of you in a role. i think the senate is fortunate. >> the yield for 30 seconds. thank you, madam chair. i want to congratulate you and commend you for taking this position. i just want at one of the thing. i always congratulate my good friend. i would not let this moment go by without pointing out that our new chair, the only person who has served on both her state house agriculture committee, state senate agriculture committee, house agriculture committee, and the united states senate agriculture committee, the only one who has ever done that. congratulations. >> thank you very much. we do have a quorum now and some business to conduct before proceeding with our witnesses. thank you very much for those kind comments to be seeing a quorum of would call the order of business meeting, senate
12:23 pm
committee on agriculture, nutrition, and for steve. the purpose of this meeting is to organize the committee in the 112th congress as required by senate rules and adopt the agriculture committee's rules as we do at the beginning of each congress. all members have been afforded a copy of the committee rules. they remain unchanged, and emotion would be in order to adopt the rules. >> madame chairwoman. >> senator roberts. >> i want to reiterate what you said, the organizing resolution and rules package are basically the same that we have always done here in the agriculture committee. we have a process that has ridge very well. assets, there are now proposed changes. within the parameters given to us by the rules committee and the senate on both sides of the aisle, staff have worked for both of these issues and i urge the support of members on both. >> we would ask for a motion. >> i so move. >> thank you. all those in favor say aye?
12:24 pm
>> i. >> all those opposed may? the eyes have it. agriculture committee rules are adopted. we also need to adopt an agriculture committee funding resolution which you have in front of you, and the motion would be in order. >> so move. >> thank you. >> all those in favor say aye. >> i. >> all those opposed nay. the ayes have it and the funding resolution is adopted. i would point out that we are working with all the members on subcommittee assignments and we will have that adopted at a future meeting. thank you very much. so let's move on tap are two excellent panels today. in the interest of time i am going to ask that members opening statements be committed -- submitted to the record as would be normal practice for the committee. of course we recognize members in order of their appearance alternating sides. so welcome, mr. secretary, to the committee. you want to thank you for your testimony. your written testimony will be submitted for the record, and we would ask that you provide us
12:25 pm
with five minutes worth of commons before opening for questions. >> thank you, madam chair, and members of the committee to rita want to thank you for the opportunity an invitation. as we enter 2011 the farm economy continues to remain strong. u.s. agricultural exports, farm cash receipts and net farm income projected at or above previous levels. farm household debt levels appear to have stabilized despite increasing land values. while prospects generally look bright, recent sharp increases in prices for major crops are generating a range of concerns. my written statement describes the prospects and recent developments in output and input markets and the challenges and opportunities that present for u.s. agriculture. i will take a short time i have this afternoon to touch on a few broad trends. as you may know recent data tells us u.s. farm exports reese an all-time high in calendar year 2010. we saw a rise in both the value
12:26 pm
and volume of u.s. agricultural exports worldwide supported by foreign economic growth, particularly in developing countries to reach u.s. agricultural exports are again expected to be a record high this fiscal year up nearly $18 billion from fiscal year 2010. with an agricultural trade balance forecasted to be a record of $41 billion. we are pleased with these numbers and remained focused on continuing to open and improve markets for our producers. we know every $1 billion in agricultural exports helps to support 8,000 jobs. we want agriculture to continue to play a leading role in the president's national export initiative in helping to reach the goal of doubling exports of the next five years. the other big trend is the increased importance of china and the chinese market. trade members just published show that for the calendar year 2010 china was our number one export market edging out canada and accounting for 15% of
12:27 pm
exports. cash receipts and production expenses for producers are forecasted to reach record levels in 2011. 341 billion in cash receipts, 274 billion in production expenses. and portly, receipts are rising faster than expenses. and that cash for an income is forecast at a nominal record of $99 billion this year of 7 billion from last year and 30 billion for 2009. after adjusting for inflation this year and last year should be to of the highest income years producers have had since 1976. these are good times for american agriculture. while all of agriculture experienced a robust recovery in 2010 and 2011, has forecast expenses are increasing, especially prices of foreign origin inputs like livestock and pete, the price of energy and operating costs. livestock and dairy industries could face financial pressure and their watching. at the same time many small and
12:28 pm
midsize operations to continue to struggle to earn substantial on farm income. we need to be aware of this reality and insure our work to expand domestic markets helps them succeed. as we discussed the safety net we should also make sure maintaining a strong safety net for producers who need it most. on the whole, we are optimistic. the balance sheet should continue to strengthen in 2011 and inconsistent with recent trends increases in debt are forecast to be offset by larger increases in farm asset values. what is astonishing is in two years the farm economy has rebuilt the equity lost in 2009. in 2011 the farm debt to assets ratio should drop further below last year's 11%. nation's farmers and ranchers should be celebrated for this achievement. careful management of debt has played an important role in helping make them a key component of a strong and quick rebound from a financial crisis.
12:29 pm
commercial banks across the country say loans are available, although standards a tight. farmers are increasingly paying them back on time. exceptions include reasons dominated by livestock, no, and poultry. last year despite low interest rates there was lower demand for farm loans than in previous years. at the same time capital spending was up, probably financed with cash or non-bank credit. we hope to see this trend continue, especially as a result of bipartisan tax deal reached in december which provides for 100% expensing to business. farm real-estate value rose by an estimated 3% from 2010 to a record almost 2 trillion. we expect this trend to continue to rely this benefits existing landowners high farm real-estate values make it difficult for individuals who may wish to enter farming and increases operating expenses for individuals who grant farm land. albert can work to confront this issue and others as reward to grow the next generation of
12:30 pm
farmers, ranchers, and producers. provide credit to those who wish to find, but for the good of our environment, the quality of life, what to the low cost of food and the american economy as a whole we must keep farm land as farmland and farmers on the farm. to conclude, as we enter 2011 the u.s. farm economy is coming off unprecedented eight -- increases. we are hoping to lead the recovery from the worst economic collapse since the great depression. prospects generally look bright. more normal weather and production increases should lead to improved supply-demand such as wheat, corn, and soybean. biofuel demand. a big challenge will be responding to that demand by developing new feedstocks, producing on more acres and producing more per acre of protecting the environment. i have the utmost confidence as i know this committee does. farmers and ranchers will be able to meet the challenges.
12:31 pm
with that of the happy to answer questions. >> thank you very much, mr. secretary. i know we all have questions. i mentioned in my opening statement that one out of four people in michigan of working because of agriculture. i'm sure everybody on the committee has a similar story. even though the number of farmers are in decline agriculture has been -- has had a tremendous impact on the overall economy. as we look, can you tell the committee where you expect to see continued growth? >> i would expect to continue to see growth, as i indicated, and exports. a strong demand for a world economy that is improving, expanding to other developing countries. it suggests a good opportunity. riyadh also focusing on increasing our commitment to trade missions, displays, exhibits of our products and also to reducing barriers. a major emphasis has to be on
12:32 pm
reducing barriers that exist to many products, specifically beefed in china, japan, taiwan. one of the problems and one of the challenges will be to make sure that we understand and appreciate the differences between small, medium-sized, and large-scale commercial farming operations. while there was a decline in medium and large commercial sized operations over the last five years, there was a significant increase in the small size operations. in order to repopulate rural america and create economic opportunity, it is my judgment that our department is to be focused on all aspects of agriculture and its diverse as we can possibly have to provide as many options and opportunities. if we are to stabilize the rural economy generally. >> we have a lot of good news to talk about and agriculture, but i don't want to just look through rose colored glasses when we look at the future for
12:33 pm
agriculture. i know that i hear a lot from my drawers about input costs, largely feed, fuel, fertilizer when we are looking at the future. to you expect trends to continue when we are looking at potential implications of rising input costs for our growers? what does that mean in your judgment in the near term as well as a long-term? >> well, obviously there are concerns on the energy side. when oil prices go up there is obviously an impact in farm country. it is something we are concerned about. we are concerned about it in terms of sectors pacific. obviously it impacts and affects livestock operations and can impact and effect dairy. we are concerned about the strength of our dairy industry. it has rebounded from a very difficult 2009, and we are cautiously optimistic for 2011, but we know that the next downturn is right around the
12:34 pm
corner. that is one of the reasons why we are focused on addressing, perhaps, a more comprehensive approach to the dairy industry. discussed this at late in the house hearing. we have a report due from our dairy council in the first part of march, and our hope is there is a consensus being developed within the dairy industry that we can address this very quickly because otherwise i think we will be confronted with the circumstances we saw in 2009 with peaks and valleys that occur far too often. >> well, if you could speak a little bit more in terms of the peaks and valleys and the boom and bust, some would argue the current success in the farm economy is to the strong markets and favorable exchange rates. it certainly has played a role, but we do have a boom and bust. don't you think we need to invest in emerging technologies and markets like bioenergy an i/o products in order to make the farm economy more resilient? could you speak about that.
12:35 pm
>> there is no question in my view that you need to diversify options and maximize opportunities on the farm. to the extent that you can convert waste products to fuel and energy, that is something we should encourage. we have roughly 50 anaerobic digester projects on going with the dairy council in an effort to convert maneuver into power and energy. we just recently announced 68 feasibility studies to take a look at alternative ways in which we could use new feedstocks to produce renewable energy and biofuel. all of that adds value, creates new economic opportunity and will help to create jobs. if we can raise the 36 billion gallons threshold that congress has set in terms of renewable fuel it would mean up to a million jobs in rural america and $100 billion of capital investment. that is the type of opportunity we need to look at. expand broadband, look at regional and local food systems cannot link economic opportunity
12:36 pm
from conservation in terms of outdoor recreation as the president announces today. all of that has to be part of an overall strategy to try to rebuild the rural economy and provide opportunities for farmers and ranchers. >> thank you very much. senator roberts. >> this secretary, thank you for coming. i am going to adjust my microphone. i am going to go where wise men never go. as i said before, the next several decades the world population will grow somewhere between nine to nine. 3 billion people. about twice as much food as we are currently producing. all of us have been concerned on this committee regarding our ability to produce a stable feet and fiber supply. now, here comes the curveball
12:37 pm
periodization as you know, about 10% of the farms with revenues above $250,000 a year are responsible for about 80% of the agriculture output. so as we reach the limits it seems certain to me that we're going to need these folks to the never if. the small number of farmers to produce the vast majority of crops. they are either going to have to grow more with what they have or even less. a consequence e-bay i have always thought our farm policy should be agnostic in terms of size. i can remember the great debates. you were present on the committee. tim was always the champion of the small family farmer. but somebody five-foot to, as opposed to the large family farmer which add up with
12:38 pm
somebody six-foot two who played linebacker previously for the university of nebraska. an acre of we, soybeans, or corn does not produce more or less depending on the size of the farm. lots of folks today like to pick on or at least think that would be a good target for budget savings. a paradox of enormous irony. so when a natural disaster hits back and impacts production fidel either through lower prices or yields the my question is what should our approach be foreign-policy wise to these 10% producers who are deemed too large for one reason or another? what kind of economic conditions do we need to insure them to be successful in meeting the future demand? >> i think we have several responsibilities to a large-scale commercial operations. first and foremost, we need to think of ways we can help them be as productive as possible. that is one of the reasons our
12:39 pm
research component focuses on livestock production as well as protection and what we are also engaged in crop production as protection. i am not convinced that we have maximized the capacity of our land to produce. at think we need to take a look at whether or not there are places in the united states that could potentially be more productive than they have been. i don't know that necessarily there are many places, but there are some that can double crop effectively that may not be. research and development is one aspect. secondly, i think we have to be aggressive in our efforts to export our supply. that is one of the reasons why commercial operations are doing well financially. we need to continue to do that and the needs to be a concerted effort to reduce barriers, have free trade agreements approved tillich and multilateral trade arrangements. i think we are focused on that. i think we do need a safety net. at think the question which was posed to me or was posed by bob
12:40 pm
stone and to the farm bureau convention in and clinton was well put when he asked, do we need a safety net system that provides a small amount of money every year regardless of the quality of the year, or do we need a safety net that provides assistance and help when it's needed the most in an amount that will actually make a difference? at think that is a really good question and one that we should be asking. i don't know if i have the answer today, but it is an appropriate question. our capacity to expand risk-management operations is one way of addressing that issue. so i think there are a multitude of things we have to do, and i think we have to recognize that science will play a significant role. we have to facilitate that science. that gets us into when you say no wise man once to go him from a person has tried to make the right said that decisions it is interesting that when you make
12:41 pm
one decision on one can't you get sued by one group. you make a similar set of decisions on another problem and get sued by the other group. we must be doing something right if we are getting sued by everybody, but this is a conversation i think we have to have as well. >> we have about 30 seconds left on my time. i know you mentioned several challenges that we face. what keeps you up at night? what is the biggest thing that you worry about? we talk about the safety net, exports, trade agreements, price volatility. your current role as secretary of agriculture, what keeps you up at night? >> two things that concern the most access to credit and capital and rural america and whether or not to have a generation of farmers to replace those who are now averaging 57 years of age. the fastest-growing segment. that is a problem we also need to address. hopefully the 2012 farm bill will build on the steps you have taken before.
12:42 pm
>> that is a very good answer. >> thank you. senator nelson and then senator johann. >> thank you, madam chairman. secretary, it's good to see you again. we appreciate your being here. in both your written testimony and the economic research services recent series of reports and provide a very in-depth look at the current state of u.s. and global agriculture along with what is obviously an interesting overview of the future potential and challenges that farmers and ranchers will face in the coming years. you have been very forthright with us in your expectations. as we are looking at agriculture today and looking at the world, we are beginning to see some of the challenges as global fruit prices continue to rise. we have both spoken at length on the importance of research in meeting these challenges of
12:43 pm
agriculture, the need to feed this growing world population that my colleague from kansas so eloquently pointed out with more limited and booked, health aspects and food production, and harmon took considerations and the need to produce biofuels. it seems unfortunate the ars and in is a budgets are basically flat if not decreasing slightly while we are increasing research budgets and other agencies by as much as 16% for nsf and 18% for doe. in view of these challenges and the steps that you have pointed out, what can the department do to ensure that we continue to get the level of research necessary to answer the questions that i there as well as the questions that will continue to develop along the way? >> senator, i think we are challenged to make sure that our research is focused on matters -- issues that matter.
12:44 pm
we have identified, i think, for five key areas where there needs to be additional research. i mentioned some of them earlier. you mentioned the issue of energy. that is certainly one of them. global food security is another area that we are focusing. number one, focusing the research dollars we have an doing a better job of leveraging the resources. our view is that if we are engaged in a competitive grant process which we are under the national institute of food and agriculture, we can leverage resources and get more bang for limited dollars. we recognize, and at think you all do as well, we have to get our fiscal house in order and we have to make tough choices. while it may seem that we have made a choice that he may not necessarily totally agree with the, the fact that you are flat land in this environment does reflect, i think, to a certain extent that it is a priority. we will continue to look for ways to stress those dollars. >> what about water resources in
12:45 pm
particular? the states like nebraska is constantly challenged in having enough water resources spread across the state but reedbuck is there anything being done to try to figure out the most effective way of dealing with our limited water resources? this could be true of the southeast but where they encounter crowd as well. >> i would say there are a couple of things. first of all, we are working on improved irrigation systems and processes by which we use scarce water resources more effectively which has implications not only domestically, but internationally. we are doing interesting work in afghanistan in that area. secondly, we continue to focus on how we can better manage our forests in both private, state, and national forests because they act as a natural reservoir. if we do a better job of maintaining and we may have a better opportunity to use that natural reservoir more
12:46 pm
effectively to control water flow. and then, you know, obviously we are working with farmers to develop a science that will actually result in as being able to grow crops in more adverse weather conditions and circumstances, in other words using less water, less pesticides and chemicals as part of the scientific opportunities we are engaged in in terms of crop production and productivity. ..
12:47 pm
>> and minnesota, as long as i'm naming a few states. so thank you very much for that work. please pass that message along to your staff. spee-2 senator johanns. >> mr. secretary, good to see you again. one observation and then a couple of questions. one of the frustrations for me, and i know for you, i think for every person who has served as a tag secretary in recent years has been market conditions relative to u.s. beef. i just wanted to put on the record again today that the situation specifically with japan is not get solved.
12:48 pm
these folks are impossible. from my vantage point. this has been going on now for years and years. we are still dealing with the standard of 20 months, and i'm not blame you because i worked on this, too. we just don't seem to be making progress with them. i hope you can convince me otherwise, but it just seems like we are just getting anywhere. offer your thoughts on that. >> senator, i would certainly agree with you that it is a free frustrating process. when you're dealing with issues involving dse and the host country japan, basically has the greater number of dse for their own domestic livestock that we have ever had. it is an interesting conversation. having said that, part of the challenge for us recently has
12:49 pm
been the lack of consistency in people are dealing with in japan. we've had three ag minister since i've been the secretary of agriculture which has made a little bit difficult. but we have engaged in serious conversations. jim miller is here and i think he can attest when he was working at usda he spent a good deal of time result in japan. we are moving towards a place where i think we can get to the yes, it is so come it is typical, somewhat obligated by the relationship that japan and korea and china and that any of the world have relative to beef. no one wants to create a situation where someone who is treated us well is getting worse of a deal or less of a deal than you're giving someone else. so it is a matter of trying to balance all of this. but i'm confident we can get there. i think it's important for us to get the free trade agreement, get that through the process, put them behind us, if you will.
12:50 pm
and i think perhaps that offers a new momentum for peace. i share with you your frustrations. >> i mentioned it as much today to send a message to the japanese yet again that we haven't forgotten, that it really, really is time to step up to the plate and solve this problem. i would have said exactly what you said six years ago. and i'm guessing and then they would've said the same thing before me but it just goes on and on. year after year after year, but i appreciate your efforts, whatever we can do to support that. and we will keep pressing. let me, if i might, focus now on another issue. i look at the usda numbers, and one thing of course that is caught everybody's attention is the carry over numbers for corn. which are historically low.
12:51 pm
virtually no carryover. barely enough, probably not enough to keep the pipeline going. i look at drought in china, and that creates a further upward pressure, and i guess if you're on the selling end of this, this is a remarkable time. at the elevator you're seeing corn prices around $7. but on the other hand as you know there's people on the buying end of that, whether it's the ethanol industry, whether it's the meat industry or whatever, and the other piece that is going on this time, a little before this, a competition between corn and soybeans. i'd like to hear your thoughts about this. where do you think we're headed here, and you know, what would happen if we had a tough weather cycle here as we go into this
12:52 pm
crop season? >> that obviously would put, just answers last question first, it would put more stress on a situation that we're keeping an an eye on. we're projecting increase plantings of three to 5% and corn which may alleviate some of the contingent on the supply-side. in the longer-term you're talking with officials with seed companies, they are convinced and i believe that their actor about this, that we have not yet maxed out in terms of the capacity to use science to increase productivity. i think in our lifetime 100-bushel to the acre, 200 bushels to the anchor were sort of the goalpost and now it's 300-bushel to the acre happening originally. they believe they can get to 400 bushels an acre in the not-too-distant future. that's one issue. on the international issue, i think what we in the united states needed it is to continue to work with other countries to get them to have a greater
12:53 pm
willingness to accept the science, to understand our advanced ways of producing agricultural products and we take some of the pressure off globally. you and i together when we were governors and started the biotech coalition, and i think we recognize that there was not an acceptance to that oversees and we're still faced that with today. >> i will just wrap up my comments, madam chair, by saying i agree with your comments about by technology. one of the points that needs to be recognized is a you take 120 or about 140 days, 120 days to get through the process. now it's taking upwards of 400 -- know, 1200 days to get through the process. it's a solution but -- >> if i might. very good point, and i would say two things. one, we have instructed a vista go through a process improvement program to see it as a way in
12:54 pm
which we could reduce the amount of time. two, there are greater numbers and greater complexity of applications that are being submitted so that makes it a little more difficult. three, oftentimes there are lawsuits in between, as you well know, that slow the process down which is why i think it is important for us to at least engage folks in a conversation in this country about science to see if we can energize the middle, the rational middle on these issues in a way of perhaps limiting or at least getting courts multiple options so that they don't basically enjoying activity for an extended period of time. >> that is something that is a challenge for us and wanted to work with you on as well, as we look at bringing people together. senator klobuchar and then senator hoeven. >> thank you, madam chair. congratulations on your chairmanship as well as senator roberts. and welcome, secretary vilsack.
12:55 pm
i was choosing -- minnesota is first and sugar beets as well as turkey production. and as you know being from iowa, we are in the top five for corn, canola, soybeans and my personal favorite, honey. >> you said corn? top five, okay. >> i wasn't going to get into a fight with the iowa over corn. anyway, we care a lot about all the issues you raise and i would say you've identified the challenges and i forgot our state with what i call the red tape issues. and i want to thank you, senator, johanns and i co-chair a biotech talk is innocent and thank you for the work you did. not just with center does a major but also other issues. we continue to hear concerns about the epa treating milk as if it were considered an oil
12:56 pm
product or the discussions about regulating dust from farm driveway. i think that we need a little common sense not only with the core process but with some of the epa rules. thursday which mentioned which i think is important, not just in the ag world but for the country. export issue. two things. one, can you talk a little bit about cuba. trying to open up some of those markets. and secondly, of the funding for the market access program at usda and why you think that's so important. >> first of all on the epa if i might, we have been working very hard with administered jackson to develop an ongoing conversation relationship so that we have a good idea of what's being discussed and thought about and allow us to weigh in on the impact it may have on agriculture. >> i think that would be helpful. >> we have ongoing conversation
12:57 pm
with our ag liaison. that's never one. on cuba, interesting. we're seeing actually a slight decline and ag trade with cuba. if we can do it consistent with a value system that's important to this country, given the complexity of our relationship with cuba, we look forward to that opportunity. there's still work to be done. on the map every dollar that we invest in export assistance has generated about $35 in export activity. i suspect if we got a 35-1 ratio you all would be, much easier to do your job and it is today. map is an important component. it's not, by no means is the only component of the relationship we have with our cooperators is important. the work of the foreign ag service, all of this is important. we have to focus on continuing
12:58 pm
reducing barriers. senator johanns question is a prime example of the ongoing challenges we have as countries create barriers, make it difficult to remove. >> to questions with regard to our ethanol. i was pleased with epa decision on the 15. but i'm wondering if there's anything usda can do to encourage state governments to ensure that that gets you through the rugged or process. and secondly, senator johnson and i are working on a bill that would include a new prospect to replace existing tax credits. i don't know if you're from either with that, but i wondered if you thought that would be more helpful to look at a more cost effective and have a tax credit toward to the producers than just the blender's. >> i think it is a good discussion to have about how best. we saw what happened when the biodiesel credit was prematurely
12:59 pm
ended and allowed to lapse. we lost 50% of our production capacity and 12,000 jobs. i think that there needs to be some attention to the infrastructure on the supply-side making it easier and more convenient for consumers to get ethanol. and i think when you look at ways in which we might be able to incent our auto manufacturing companies to spend 150 bucks to make every car flexible fuel vehicle or to work with him to figure out what we can do to help them make that happen. understand their under a lot of challenges but that's an opportunity, a discussion we are to have. if we can produce a greater demand and we produce more convenient supply, and i think this industry will take off. at the same time we have to identified additional feed stocks. this is an industry that has its presence in all parts of the country. because if we get
1:00 pm
36 million gallons, it's a million jobs in rural america. $100 billion in capital investment and both of those are sorely needed in rural areas. >> thank you. i can ask a question in writing about the milk program. i appreciate your help with a difficult subject. one of the number one concerns i've heard in our state, and we look forward to working with you in the next farm bill about what changes we can make to make that a better program. >> may i? we actually think, talking about -- we are going to suggest that kerry council, with its report next month, and we honestly think that is something you might want to take it before you get into the 2012 farm bill because there is energy and passion and somewhat a consensus to being developed around the entire dairy industry to sort of see if we can get better price stability and less volatility. >> thank you. >> thank you very much. senator hoeven, before you question let me welcome you again to the committee, along with senator bozeman.
1:01 pm
as you may have heard with the exchange between senator klobuchar and the secretary, our competition is not between democrats and republicans. it's what crops to produce and this is a significant competition on the committee. so we are very pleased to have you and welcome. >> thank you, madam chair. i look forward to working with you. also to our ranking member, senator roberts. it's good to be part of this committee or and, of course, people i've worked with for many years as a governor on two previous ag bills, working out all the things that come before the agriculture committee and certainly the next farm bill. and you're right, it does come down to who produces what and how much. and along those lines i do need to measure that north dakota is the number one producer of 14 different major commodities among all 50 states. things like toads. let's see, i just jotted down a
1:02 pm
few. oats, barley, sunflowers. jamaican honey. i will mention we are number one in honey. >> but not turkey. >> but not turkey. and we share a wonderful border with minnesota when we go many sugar beets and share common interests not to mention court and soybeans. it's good to see you, mr. secretary. thank you for your many visits to our state. we appreciate it. also want to measure the last time you were there i think was either that day or the next day that we loaded anchors and herford caddell on the 747 and export and export them to kazakhstan. which just goes to some of the exciting things that happen in agriculture that people don't think about food, fuel and fiber technology is playing a tremendous role. our producers are absolutely the best in the world. good foreign policy is important for rural america. it's important for farmers and ranchers, but it benefits every
1:03 pm
single american. and people throughout the world because we have the lowest cost, highest quality food supply in history of the world. thanks to our producers. so when we talk about good ag policy it affects everyone. and i just want to start by getting some of your thoughts as we enter writing a new farm bill. your priorities and specifically, if you talk a little bit about the safety net. we have a countercyclical safety net composed of three parts. the countercyclical payment, direct payment, crop interest. i think it's important for our producers. and if you want, just touch on that a little bit and your priorities as we move forward. >> the farm bill is an extraordinarily complex document that involves really all of rural america, and at the end of the day might goal is to try to revitalize the road economy.
1:04 pm
and obvious he you start with a strong agricultural economy. and that means continue investment in research as we talked about before. it involves continued export assistance. it involves ways in which we can promote american products. you point out that we are blessed. a recent study shows roughly six to 7% our paycheck goes for food. that substantially less than it is in other parts of the world which means america's act reflexively with a paycheck than the rest of the world. nation think a farmer and rancher for that privilege. as far as the safety net is concerned, there's no disagreement that we need a safety net. i think what we have to understand is how different farming i is in different groups of farmers. we described in a recent study basically three groups. we have residential farming which is a small operation. frankly these folks are not
1:05 pm
farmers in the traditional sense. they are people who work off the farm and live in rural areas that have a small acreage and so a very small amount. may be less thousand dollars. there are 1.3 million people in that category. that are important to encourage because they help support roe commuters. vendors 600,000, roughly five to 6000 in the intermediate sized operation. less than $250,000 in sales. these folks make up a good hearty group of folks from hard-working folks. they don't make much of anything from their farming operation. in the state and a time when we saw farm income go up 34% last year these folks would be lucky if they averaged $10,000. we talk about safety nets we talk about direct payments, we talked about programs -- programs like that, that group does need assistance and they need our farm income. so rural development becomes important for them to be able to keep before. that's part of the safety net.
1:06 pm
then you got commercial sites operations, more than $250,000 in sales. they're doing pretty well in this better economy. they are the ones who export. they are the ones who'd generate most of food and our import. the question is at what level do we in fiscally constrained times, at what level do we provide assistance and when do we provide it. and we provide small amounts over a period of each and every year regardless of how well they year is or do we help those folks out at a time when they are desperately in need? there's a fourth component to the safety net that we put in place in 2000 a farm bill that needs to be worked on. and that is a disaster assistance. he of crop insurance, payments. you've got a countercyclical stuff, but you also have disaster assistance. in the past it's been ad hoc. we've made an effort to try to systematize it with some of the livestock progress.
1:07 pm
they work well with some cross but they don't work so well for other crops. one of the challenges is can we figure out how to do those systematic disaster programs in a way that is beneficial to all across. otherwise you will continue to have ad hoc disaster which i don't, i think were trying to move away from. the last thing i would say is i think there really needs to be a conversation about risk management. as you know we've made a suggestion which isn't necessarily agreed upon by everybody in this committee to take a look at those direct payments and figure out if there is a way in which someone is making a half million dollars in farm income for $250,000 in nonfarm income, do they really need a payment? if so, what should that payment be? and is there a way in which we can use risk management more effectively and a more cost efficient way to provide the kind of support folks need when they really needed. these are all questions we have to work on together.
1:08 pm
>> thank you very much. senator bennett. >> thank you, madam chair. and congratulations to you and the ranking member. i enjoy serving on this committee so much because of the bipartisan work that gets done here every time i hear it feels like the refuge from a lot of the partisan work that goes on in the senate so i look forward to supporting both of you in the work, in front of us. mr. secretary, i wanted to say thank you to you for coming by my office earlier this week to meet with the and senator udall and continue problem. i won't take time here except to say thank you for your efforts to remind you again of how important it is for us to address this issue for the health of our forest and the help of our watershed. not just ours in colorado but in the rocky mountains region. i wanted to raise one of the issue that's important to colorado before get into some of the line of questioning. that is, the inability of our potato producers to sell into
1:09 pm
mexico. and i wonder if you might give me an update, give us an update about where those discussions stand. i know you have been trying to. >> i traveled down to mexico in december of last year, and met with secretary barr got to talk about a variety of issues. and potatoes was one of them. what we agreed to do was have our team essentially need to see if there was a way in which we could innocent immediate this 26-kilometer barrier that we are trying to tear down. he expressed a willingness to do this. and there have been meetings, committees have taken place at the meeting and our hope is that progress resulted in more favorable treatment of our potato, potato growers. >> i hope you'll keep us posted on that and let us know here what we can do to help. we sometimes forget the discussion of how important
1:10 pm
mexico is. >> number three trading partner. >> exactly. the second area is in many ways that things are happening as you were saying. prices are high, the deleveraging that has gone on among our producers really substantial and great i think model for the rest of us. and to some degree things are better, but underlying issues that are wrote economy faces are still what they were went into this recession in many ways. the agriculture prices initially do not translate into economic growth. i wonder if you could share with the committee what you think four or five most important things that usda, the federal, can do generally to support an economy that really will mean that there is, that there is a wrote economy going forward for the sons and daughters and people in the eastern plains in colorado for example, who wonder
1:11 pm
very much whether there's going to be the same opportunity or a new opportunity for the next generation of farmers, next generation of people who want to live in small towns on the eastern plains. >> you know, over the course of my lifetime, populations in rural america as a percentage of our overall to publish a decline. the population has aged. the poverty rate is higher. unemployment rates have been higher. in this most recent recovery rural america is recovery a little more quickly than our urban and suburban friends, but nevertheless there are still trendlines that we need to try to reverse. i would suggest that there are a couple of things. first of all within usda i think the things we can do to fundamental change that dynamic are to continue to expand access to broadband so that farmers and ranchers have access to real-time information and make a real-time decision. small business owners can expand their markets from local markets
1:12 pm
to global markets. schools can do a better job. health care centers can link up a special is that would be impossible for them to afford on a day-to-day basis. secondly, we need to embrace vista energy future, whether it is to our renewable energy. there are tremendous opportunities for economic growth in rural communities. most of the renewal energy would be produced in rural america and we need to figure out to maximize the economic return of that for rural residents. third, i do believe it's important for us to continue to look for ways to create domestic markets, apart from renewable energy and fuel. i think the local regional food system is being connected to producers and consumers is important because you can develop local supply chains that are job creators. entrepreneurs who can create small what housing or cold storage facilities make it easier for schools, universities, whatever that might be located in rural areas to actually create jobs and
1:13 pm
provide alternative opportunities for producers. i think it's a very, very important that we do a better job of maximizing outdoor recreation and using our conservation dollars in a way that produces more habitat, more opportunities for hunting and fishing and hiking. it's a multi-million-dollar operation we're talking about. and finally i think we need to look at ways in which we can create verifiable, incredible ecosystem markets in which were basically paying farmers, ranchers and land owners for certain conversation practices that are of a societal benefit, whether it is water issues, senator nelson's comments earlier bring that to mind. things of that nature. i think we're working at usda to try to develop those kinds of models that might work. then finally, i think you've got to be concerned about credit and the ability to track venture capital into row communities so you have a sense of entrepreneurship. that is a real challenge.
1:14 pm
as a governor we get several governors here. i suspected that with these issues when they were governor. i served it and we need to be very creative how we get venture capital into those rural areas speak out thank you, madam chair,. >> thank you very much. sender bozeman, wellcome. >> thank you very much, madam chair. and it is an honor to be with you. i was just telling my colleague we have an advantage of being junior members. we get to know the witnesses. we can just lean over and shake their hands and visit with them. it's an honor also to have you here at and listen to your testimony. we appreciate your service. as you know, ag business is tremendous and important in arkansas and i have the opportunity to visit with many of my producers. you mention the different layers, producers and things. but i'll tell you. it seems to me like regardless of who i'm messing with one of the top of list is the epa and the potential for the regulations that are coming down.
1:15 pm
you mentioned the waste products, tried to get rid of those, but that offers great potential. i think with the initial boulder rolls and things like that, a bunch of that couldn't be done. so i guess my question is, you mentioned, i'm so pleased to hear that you're working with your counterpart on the epa to try and figure out these things as they go forward. i'd really like, besides that, what are we doing specifically? are we outlining if things like the foreign desk rule, the permitting, expand the clean water act. and again, regulation. i guess what i'd like to know is what would be the economic impact to our farmers and our producers if that concept is to go for. i really do think that that is the question right now.
1:16 pm
>> senator, one of the reasons why i think one of the reasons why the boiler room was change was because of the relationship and input that usda provided as a that will was being put together. i think it was a recognition, the impact. we are doing several things. first of all, we are absolutely encouraging the epa administrator spend some time in rural america, and she has. antigo on farms and see what's taking place on the form. so she is a clear understanding and a clear picture of precisely what rules or regulations might in fact, how that might impact involving operation or white may not be necessary given that farmers and ranchers are doing. secondly, were beginning to quantify in very real terms the conversation benefits and environmental benefits of stewardship practices on atlantic we do this in the upper mississippi river result of
1:17 pm
which recently a steady in the chesapeake bay area an effort to try to reassure people that farmers are, in fact, adopting practices and, in fact, are willing to do so. we are engaged in negotiations and discussions with the epa about how we might be we might integrate regulatory certainty. we did this with the sage grouse in the western part of the states with the department of history ended in tainted species act. if producers are willing to do abmc, in exchange for that there'll be some revelatory certainty. the rules of the games would be changed on them. what could make their investments in appropriate. there is a liaison between the ag department and epa, so we're constantly providing input, analysis, information on what's being proposed or suggested in an effort to try to make sure that there's a clear understanding on the part of the epa in terms of how this might impact farms, ranchers and producers. and i think the last thing i would say is we facilitate
1:18 pm
conversations between commodity groups and livestock groups and epa administrator so that is a clear understanding of precisely what is being proposed. a lot of times things circulate through the process and to get bigger and bigger and bigger as they circulate, and it gets scarier and scarier as they certainly. that kind of conversation i think and make sure people understand what the facts are. i the epa is soliciting at least from the vantage point of the things we've been focusing on. i get the impression that they are at least open to a dialogue and conversation with us which is important. >> i appreciate that, and i appreciate those efforts. again, i think some really, number of values as far as economic impact are helpful. your opinions as being secretary, your department's opinion as to the cost benefit, what you're actually doing. and then again, i was the
1:19 pm
ranking member of water resources so i understand that there is a lot of stuff that is blown out of proportion. but there's a lot of stuff that isn't. and so that's really come as you mentioned also, the idea that you do the best management practices, five years later somebody comes by and says no, you're doing it all wrong. those things are not a good situation. so thank you, madam chair,. >> you're welcome. senator brown and then senator thune. >> thank you, madam chair. you look good in that chair. >> thank you very much. >> congratulations on your first and. appreciate having someone who represents a state that looks like mine in the chair except for the corn and soybeans for. secretary vilsack, thank you for your leadership. yet made such a difference in these two years. no question, i know that many people ask questions pre-wide-ranging. i just want to bring to your
1:20 pm
attention which you know about but in a public way, what happened in worship ohio at the research station. is filled with ohio state, involved in doing all kinds of innovative research on animals and plants and crops and the tornado that hit. it caused a lot of devastation as you know. deputy secretary was there. i appreciate her coming out and visiting. we will work with you on repairing bad and getting it up to the standards that was before. i've been there on numerous times. i know that deputy secretary enjoyed your visit there. and contribute a lot, despite her presence. i thank you for that. thank you, madam chair. >> thank you very much. senator grassley came into the room and left. he was technically the next person on the list, but senator thune we will turn to you in his absence. welcome.
1:21 pm
>> thank you, madam chair, and secretary vilsack, thank you for your service and appreciate you being before the committee today. lots of challenges as we look at the next farm bill and all of us are interested as we begin to hear testimony and anticipate what the deal might look like. i wanted to ask you a question about, in the midwest we have been somewhat insulated, not entirely, but some way from the housing in the impact of the country. but i am a little concerned about potential for a land boom, a farmland boom. are i should say a bust and the place like our state. we have a lot of land that is going for prices we haven't seen before. only turn by higher commodity prices. who knows what all else. agriculture is been very profitable as of late. my question has to do, if you have land values reset either
1:22 pm
due to a drop in commodity prices or an increasinincrease in interest rates, how survivable is that going to be this time around? we saw that happen many, many years ago. my impression is at that time there was a lot more on the balance sheet of a lot of our producers and it is today, but what's your sense of the potential for that kind, a problem, a bubble so to speak like what we've seen in the housing market around the country speaker i appreciate that question, and i think there's a lot of human toll that can take if it doesn't get handled properly. i think the difference between then and the '80s when we're in a situation where land prices were inflated and all of a sudden the bubble bursting, is, in fact, the debt load that is being carried by producers. the one advantage i think we have, the debt to asset ratio is
1:23 pm
very strong right now. i mentioned that it's about 11.3%, so it's a relatively good strong solid ratio and rent is paid that that ratio may very well decline again this year. so i think we're in a little better shape than we were to weather the storm. unit, the other thing i would say that usda, i think is probably more engaged in terms of farm credit than it has been in a while, all across the board. we seem rather significant increases in many of our lending programs. we are proposing adjustments to those programs, but again we are doing a pretty good job in terms of making sure our low decisions are good decisions. so i think we're in a slightly better position than we were. but as you well know with agriculture things can change very rapidly which is why we have to constantly look at ways to improve demand, improve
1:24 pm
productivity, try to ratchet down as best we can. >> with regard to improving demand, when you anticipate that the trade agreements will be submitted to congress be? my hope is that free trade agreement is said that as said that as soon as possible. i would anticipate that began shortly. there are still a few details that have to be worked out. as i understand colombia and panama, but my fear is that once the korean trade agreement posted process, and help the rather quickly, that creates momentum. at the same time that's occurring, the focus can't just be on those trade agreements. it has to be on multilateral agreements as well to it has to be as senator johanns and i had a conversation earlier, breaking down barriers that existed far too long in some countries in terms of beef trade and some of the other challenges we have. it's a combination of all of
1:25 pm
those. >> from tunisia to egypt a lot of what the impact of global unrest on food prices, and i'm a believer that the entity feeding a growing global population is sort of involves expanding biotechnology and modern farming practices beyond our borders. and i guess my question would be, what can the united states and our trading partners do to help address that? >> we developed a different approach of biotechnology from international perspective. what we've done is suggested there needs to be a much more aggressive public policy effort in terms of matching farmer to farmer, scientist societies, political leader to political leader discussing this because as you know there's a lot of objections and concerns that were raised in some areas without a great deal of justification, in my view. to that kind of dialogue has to take place. we also think it's important for the united states to partner with countries in regions, africa and asia, that have
1:26 pm
embraced biotechnology so they can act as sort of a spokesperson on that continent or in that area. perhaps a more effective and more persuasive with their friends and neighbors. we can provide support and assistance to we are trying to identify who those might be whether it is kenya or the philippines. and then finally we need to do a better job of focusing on the benefits of this size, the ability to use less water, less chemicals, less pesticides as well as the extraordinary increases in productivity. when you combine that with just basic improvements in agriculture, they can be incorporated by many of these developing countries. their productivity can certainly be improved. >> a quick question. i'm hearing from both sides, and i'm sure you are on these, livestock marketing girls. what's the latest with regard to that? i understand you're doing some
1:27 pm
additional economic analysis. when do you anticipate that we might be looking at that analysis, and is that going to be forwarded on, available? >> we didn't do the analysis prior to the commentary because we wanted the benefit of the comments. we wanted the benefits of information from folks. we received in the neighborhood of 60,000 comments. we are in the process of categorizing each of those comments in areas of the rule. that information will be taken by joe and his team. i'm told, joe, i'm not going to box them into a specific arbitrary timeframe. i want him to do his job and i want him to do it right and thoroughly. and i have the confidence he will be able to do that. we want to get it done but we want to get it done without forcing it to be done in a way that is not -- it's not correct.
1:28 pm
>> thank you. thank you. i think in interest of time we will move on. senator bachus and then senator grassley. [inaudible] >> thank you, madam chair. congratulations to you. my congratulations to the good senator of kansas. thank you, mr. secretary, for taking time to visit with us today. we all know how busy you are. thank you very much. i would just like to say my sidebar here, which i personally appreciate working with you in lots of different measures and lots of different ways. you're a good public servant, good i went, good ag secretary. you're a good man. i deeply appreciate working with you. >> thank you. >> as is the case for all members of this committee, agriculture is one important to my state as you know. it's our number one industry. ever since i've been in public
1:29 pm
service it has been and will continue to be for a long time. about 50% of the montana economy is tied to agriculture. it's very, very important. we've done well in montana with our products. especially exporting overseas. the point want to focus on, in on is getting more markets, opening up more markets. ..
1:30 pm
>> i talked to the president about that today. >> i support the trade agreement so long as we get meaningful inquiries and as well as supporting panama and the columbia free trade agreement. we have to get those done very quickly. next, with the to the fda's as i
1:31 pm
know you know, we're losing our market share in columbia because we failed to pass an fda. you know between 2008 and 2010, america market shares in columbia declined from 46% to 21%. for wheat in particular, american market share in columbia fell to 43%. canada is about to enter in forest free trade agreement with columbia, and we are very concerned that canada is a consequence that we have an advantage over us, montana as well as colombia. usda released a report on
1:32 pm
agriculture, my standing is exports is to prove around 258% since fiscal year 2006. again, these trade agreements make a big difference. colombia is the great direct commercial but also geopolitical. it's important the united states has a strong presence in south america. if we're not there, there will be -- [inaudible] we noticed the degree to which china is trying to engulf market share and its position in colombia. they want to build a railroad that competes with the panama canal. it's real. i've talked to the colombia
1:33 pm
ambassador about this a few days ago. what can we do about china? how can we get more imports into china? what leverages do we have? second, the fda's, i'd like to hear from you to the degree to which the administration pushes and gets beef into korea at the same time. >> well, senator, thank you for those questions, and obviously thank you for your continued advocacy of beef producers in the country. you are one of their strongest advocates and will continue to be. in terms of china, we are essentially five to ten awfuls apart from being able to reach an agreement that would result in a broader access in the chinese market. we had conversations in the jcct in december which the chinese indicated willingness to take beef bone in and bone out. we had conversations that they would be willing to agree to.
1:34 pm
we sent a technical team, jim miller, who then under the secretary spent two weeks in china with technical team, and essentially, what happened was we wanted 10-15 awfuls on the list, and they were willing to commit to five. the challenge is making sure as we reach these agreements that we don't jeopardize our relationships with other countries where the market have been open. we'll continue to press this, work on this and continue to pursue it. when the korean free trade agreement is approved, that will create momentum in a variety of areas. it will create momentum to recreate efforts in china relating to beef and allows us to move to colombia and panama
1:35 pm
to get the agreements finalized and get them to you for quick action. i think the lynch pin is the free agreement, and once that's through the process, it puts us in a better position. >> [inaudible] >> well, the koreans have indicated a willingness to go to 30 months. they've indicated a willingness to pursue further discussions on how to get to oie compliance based on consumer acceptance and that from our perspective gives us the capacity to make a significant step forward in opening the market and then the process of full and complete opening of the market, oie compliant sometime in the future. you know, honestly, when we take a restricted position that's all or nothing, it makes it extremely difficult for us to make progress, and so our view
1:36 pm
is if we can get to 30 months bone-in, bone-out, trade that are significant to their culture and our market and have further negotiations, that will result in significant increases in trade. >> thank you. >> [inaudible] >> yes. >> [inaudible] [inaudible] [inaudible] i've been asking for something more than this. i cannot support the agreement unless we get something.
1:37 pm
[inaudible] >> thank you. senator grassley. >> thank you, i also want to echo what senator baucus said on the job you're doing. >> thank you. >> they said new members of the committee can sit closest to me. you can't be a new member of the committee. you know what the deal is? this is my third committee so i get appointed, and i fill the last slot, not the first one. >> would the senator yield? >> your glass of ethanol is up here. [laughter] would you start my clock over again, please? [laughter] >> we'll give you back 30 seconds, senator. >> i was going to ask about trade, and i think most of the trade issues have been touched on, but part of my question was the extent to which you may not be the lead on trade issues for the administration, but you
1:38 pm
obviously play a very important role as it relates to agriculture. could you tell me just a little bit about how you see your role in trade issues like korea and colombia or any trade issue? >> sure. first of all, it's to make sure everybody in this town and everybody in the country understands how successful agriculture trade is relative to other aspects of the economy. when we talk about a $41 billion trade surplus projected this year, to put this in proper perspective, five years ago that surplus number in ag was $4 billion. there's an eight to nine fold increase in surplus, and every dollar of ag trade is 8,000 jobs. it's extremely important representing 10% of our total export. we have a close relationship with the u.s. trade representatives office. we have people right now discussing in geneva. we are anxious to con sue mate a
1:39 pm
deal, but we have to have a deal that's fair. in order for the deal to be fair, it's important for the india's and china's and brazil's of the world to have access to our products if they expect us to look at the support structures and systems to quantify what we are getting. we have an ongoing relationship with the trade offices. we're engaged in the discussions relative to ag trade. we have a very significant presence internationally. we have 99 offices and what's done is trade related. we've developed relationships. we've seen a sight increase in our trade shows here in america. we've is seen an increase in the exhibits we promote with american branded products. we are proposing continued support for market access program and all of the other financial programs that provide assistance. we are very aggressive in this
1:40 pm
space. we see this as one of our principle responsibilities. >> let me express a frustration with colombia, and you don't have to respond to it, but i'd like to respond. that would be going back to the 2007. republicans are thrown out of the majority. democrats come into the majority. they aren't satisfied with the way it was negotiated, so they say we have to sit down, renegotiate, and then on may 10, 2007, there's a bipartisan announcement between the democratic leaders of the congress saying we have things worked out on colombia, and then things still are not done. that's a frustration i have. there seems to be moving of the goal posts, and i just expressed my view, and i don't want to ask you to respond to it, but you know how i feel about it. if i could go to india, and i know that you and under secretary miller an your fs-18s
1:41 pm
work hard on resolving agriculture issues with india, and i know you worked hard and i'm disappointed as you probably are that we haven't had a res return from india, and it's such a large and expanding economy and filling up the middle class very fast. unfortunately u.s. exports to india are limited both in value and in range of products. in 2008, india received less than one-half of 1% of the total u.s. agriculture exports and ranked 39th among overseas markets for us. as you may know, senator baucus and i requested that international trade commission conduct a 332 investigation on india's barriers to imports. the findings suggest that inya's high tariffs are an impediment
1:42 pm
to exports. it includes sanitary measures, substantially limited or prohibited. considering everything that you've done, what is your department doing in coordinating with other agencies to bring about resolution of this frustrating challenge? >> chatted with the president and had extensive conversation with ag minister and frustration, i don't know if that's a strong enough word, senator. i'm not sure in this context i can use the language i'd like to use. it is very frustrating. you know, it's complicated by the fact that there are a multitude of other areas and issues in which we are dealing with india that are very, very important and significant. i've sent a strongly worded letter to the ag minister in
1:43 pm
india about dairy and access to the dairy market, and obviously they have certain religious concerns which we try to address. we are going to continue to focus on trying to open up the markets. we're trying to get our international partners and friends who want a round to be concluded to press india with the fact they have to open up their markets. the reality is if they open their markets, the consumers will have more choice, and the consumers will have better price. their producers will be encouraged to be productive and focus on what they do best, and they also be benefit, but it's a hard sell right now. it's a very hard sell. >> the last thing i would say is kind of -- i hope that you get plenty of opportunity to present to the epa a lot of things that they're doing that's detrimental to agriculture, harmful to agriculture, and there's a lot of them i could bring up, but there's enough of them you can
1:44 pm
come to the conclusion that epa stands for end of production agriculture. anyway, one of them is fugitive dust. i'm sure you know what fugitive dust is being from mt. pleasant, iowa. they have a rule that somehow the farmers are to keep dust within his property lines. i try to tell them only god determines when the wind blows and only god determines when soybeans are 13% moist and you have to combine them. when you combine, dust flies. you have to have the common sense that you can't combine beans just when the wind isn't blowing. it's frustrating to me, so you don't have to comment. i just hope you can make it clear to them because you're from the same part of the country i am, and they just don't seem to get it. >> senator, can i share in the proceeds from the new bumper sticker that you just created?
1:45 pm
[laughter] >> i think on that note, mr. secretary, thank you for coming. these are all issues we want to continue to tackle with you, and we thank you for your leadership, and i would say as i began today that 16 million jobs come from american agriculture, and we look forward to working with you to make sure that our farmers have every opportunity to succeed, so thank you very much. we have a second panel. we'd like to have them come up, and i know that senator brown has to leave in a moment and wants to make an introduction first as we are bringing our second panel forward, and then we will proceed in introducing the other panelists, and so we'll wait until folks are seated and then get started. [inaudible conversations] [inaudible conversations]
1:46 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] >> we'll get started. we appreciate your patients and going us today i know from coming around the country, and i'll let senator brown proceed first. >> thank you, and congratulations to you and senator roberts on your leadership in the comment. i want to introduce fred yoder who is a farmer, and dust doesn't happen on his farm, but fred is a farmer and agriculture leader and a real visionary thinker in my home of ohio. he's worked closely with my staff that staffs this committee and staffs on other issues, and during the farm bill debate, i appreciate the counsel that you
1:47 pm
have given to joe and to me to help us understand the issues from our perspective as a real trusted advise ser. he's from plain city, ohio. it's the home of the famous dear dutchman restaurant and their home made pies. you should try them. you'd like them. fred's imn a leader not -- fred's been a leader in the national corn growers and volunteered thousands of hours remitting farmer's interests throughout the world. i believe he was the only american farmer to attend the world climate discussions in copenhagen where he was a strong advocate in protecting and advancing the interests of u.s. agriculture. he reported to me personally and to joe his observations from that. he continues to promote policies that support farmers and addresses energy independence and he's a proud grandfather i would add. i'm glad he's here today.
1:48 pm
i was hoping the last one wouldn't last this long aeroi have to leave, but fred, thank you for joining us. >> thank you, senator brown. i hope the pies have michigan cherries in them. good, good. absolutely. let me take a moment now before turning to senator roberts who has an introduction, but i want to invite and welcome keith care who was the director of the michigan department of agriculture and rural development, and prior to serving as director, he was the director of industry affairs and one who provides to the industry. mr. creagh held numerous positions with the michigan department of agriculture, so he combs with a wealth of experience and expertise to his
1:49 pm
position, and we welcome you. >> thank you, senator. >> thank you. and senator roberts, you have an introduction. >> thank you, madam chairwoman. we have an excellent second panel with expertise. i'm pleased to introduce one of our witnesses. he's the president and chief executive officer of the federal reserve bank of kansas city and the senior member of the federal open market committee. kansas city reserve bank covers the 10th federal reserve district comprised or includes colorado, kansas, nebraska, oklahoma, wyoming, the northern half of new mexico, and the western third of that state just to the east of kansas. i think it is fair to say that his district includes agriculture, including lives stock, specialty crops as well as by yo fuels and processing.
1:50 pm
mr. hoenig, it's an honor to have you here. i've had the privilege of meeting with mr. hoenig. he's innative of forted madison, iowa. he resides in the kansas city, received his doctorat from iowa state. he had the role of president in 1991 and serves as chairman of the federal reserve's president committee on regulation, bank supervision and legislation. indeed, it's a tough job. he's the longest serving of the 12 current regional bank presidents and is the longest tenured member of the open market committee which has
1:51 pm
authority over u.s. monetary policy. now, if you all haven't read it, i would encourage you to thumb through this week's "time" magazine. there's an article entitled the man who said no to easy money. describes further down it describes him as the heretic in the preeshood, a little -- priesthood, a little strong and i don't know if that's true or not, but i ask that a copy of the article be included in the record. we might preclude it by saying that i consider tom as a profile on courage. >> without objection. >> he brings a valuable perspective to the hearing especially the questions posed by senator thune, and i look forward to his testimony. thank you. >> last but not least is senator joe outlaw. he's a professor and economist
1:52 pm
in the department of agriculture economics at texas a and m university and serves as the codirector of the agriculture and food policy center. his extension education and applied research activities are focused on assessing the impact of farm programs, renewable energy, and climate change legislation on u.s. agricultural operations. we appreciate all of you being here and your testimony is a very important part of the record for our committee, and so i'm going to ask mr. creagh to begin. thank you very much for being here. >> thank you chairman stabenow. i'm happy to be here. i want to express our appreciation for your commitment and leadership on food and agriculture issues. we also recognize the remarkable
1:53 pm
new opportunities for ruferl america, and we look forward to a continued partnership with you to assure michigan's food and agricultural industry is strategically aligned to enhance our growth opportunities as we reinvent michigan. michigan's food industry contributes 71.3 billion to the state's economy. the food processing and related businesses employee more than 1 million residents, approximately one in four jobs. this is a robust and high-tech industry that will serve as one of michigan's and the nation's foundation to the long term sustainable economic recovery. at a time when michigan lost 850,000 jobs, our agriculture economy experienced a decade of growth that expanded at the rate five times faster than the rate of general economy, 11.9% versus 2% between 2006 and 2007. further, since 2007, we have seen a 27% increase making agriculture a connerstone in
1:54 pm
michigan's diverse future. as a result of the soil, fresh water, and climate, we are well positioned to continue to growth and expansion at all levels of production. we produce 200 commodities on commercial basis and lead the nation in 18 of these. michigan is developing a comprehensive food strategy that prioritizes food safety, food security, nutrition and health, energy, trade, environmental stewardship, and rural development. it is fundamental and part of the core mission to provide a safe food product for the citizens of michigan. we will continue to work with the federal partners to seek appropriate funding and implementation of the food modernization act to allow for a vigorous and collaborative approach teen partners. the risk of contaminated food products reenforces the need for a food inspection. collaborating with the federal partners assists on down playing
1:55 pm
the roles in the food safety continuum. the rurm development applauds your support and leadership with grants. having these resources available for cost sharing opportunities provides much needed research, training and education that otherwise may not be available for food and agriculture entrepreneurs. the health of michigan citizens is tied to the healthy food supply. there's a dynamic industry generating $26.9 billion and employing 334,000 people. merely siting a food processing plant in the community doesn't assess the long term growth. to ensure growth at the forefront, we have to conduct a thorough review of the facilities. all the following components are important to the process that must be dressed, infrastructure, trained work force, capacity to deliver goods on a predictable basis, food safety checks and
1:56 pm
balances, access to available markets, and appropriate inspections and certifications. add quality infrastructure consistenting of roads, rail, and high speed communication is part of the strategy. we appreciate the opportunity to work with usda rural development to face opportunities in our rural areas to ensure our citizens compete in the global marketplace just like rural electrification was crucial to the 20th century, access to high speed internet is vital to today's rural communities. michigan is fortunate to export almost one-third of the agriculture products generating more than $1.55 billion annually and employing 12,000 workers we have doubled the exports since 1997. in 2009, we directed over 253 million in exports to canada alone. canada worked with the food export association of midwest through the market access program to provide ceo port assistance to the small and
1:57 pm
immediate yom-sized companies. because of this partnership, in 2009, we jointly assisted over 60 companies participating in nearly 150 programs or services which resulted in an increase of $13.6 million in export sales. we look forward to continuing this partnership while we build on international success. tourism is another growing area in michigan. the wine industry generates over 1 million tourists over year. we rank in the top four in the nation for farmer markets as well as the rate of growth. by spending $10 per household on locally grown food, 40 million circulates in the economy. the continued growth of the food industry requires the integration of new science and technology as well as the implementation of appropriate risk management tools in order to minimize the impact with exotic speech sees. sharing the food culture
1:58 pm
industry has the necessary tools available from the u.s. department of agriculture, the environmental protection agency, and the food and drug administration to provide relief from these occurrences is critical. continuation of programs that support these efforts ensure the future growth of michigan. farmers appreciate the assistance made available to them. an example of this collaboration is a conservation technical assistance initiative by leveraging 100% match of usda and we put engineers and technicians on the ground to help farmers design conservation practices. these leverage $16 million in federal cost share dollars paid to the producers for the installation of practices. the expenditure of the dollars resulted on return on investment and provided substantial protection of the great lakes in our michigan environment. we have to provide flexibility to support ensure neuros who make a difference in the recovery process.
1:59 pm
we look to reinvent michigan and we stand ready to assist in the long term economic recovery. we look forward to working with you on agriculture and nutrition and forestry to make america a great place to live, work, and play. >> thank you very much. >> thank you, thank you, madam chair. [inaudible] oh, sorry. agriculture remains a vital industry in the area of kansas city, and accordingly, our bank has a long tradition of focusing significant attention on industry developments. our observations on agriculture in turn have given us useful insight into u.s. and global economies more broadly. my remarks today i will describe recent developments in the farm economy and discuss the risk that have my attention at least and i heard discussed here earlier.
2:00 pm
first, agriculture broadly defined as farm production and jut put from related industries accounts for one sixth of the jobs and economic activity. this declined as other parts of the economy have grown. broader agriculture industries, manufacturing, transportation, distribution, and food retailing, for example, opened new job opportunities in both rural and metro areas. this cushions the rural economy and other regions across the nation during this recent recession. the industry strengthens and supportings further improvement in the rural economy remains strong today. in 2010, tight supplies for farm commodities resulted in a sharp rebound which supported sales and farm equipment and other farm-based industries. strong elements of the rural financial system, commercial banks with large agriculture loan port foal lows --
2:01 pm
portfolios posted stronger returns than in the past three years. when more than 300 commercial badges failed, only 22 agriculture banks throughout the country failed. agriculture is also benefiting directly from the strength of china as we have heard here, another emerging market economy where rapid income growth drives up food demand. the united states remains a net export of shipping 40% of wheat, cotton, soybeans, and rice crops to foreign countries in 2010. the united states meat exports are expected to rise to record highs in 2011. looking out further, economists expect global growth to exceed 4% well into 2012, but the develops emerging economies remaining in the lead. rapid income gains then further increases in demand for higher protein diets. despite these prospects and these prospects of sustained
2:02 pm
farm income growth, u.s. producers must remain alert as they face challenges related to the very success and tied to recent developments in the financial markets. serging commodity prices and low interest rates translated to increasing farmland values. in our bank's fourth quarter survey of agriculture conditions, for example, cropland values in nebraska and kansas were nearly 20% above levels and more than 75% higher than five years ago. this run up in farmland values occurred in financial markets characterized by high levels of liquidity and unusually low interest rates. history taught us it is nearly impossible to determine how much of the farmland boom is an unsustainable bubble driven by financial markets and how much results from fund thal changes in demand and supply conditions. therefore, if surprises no one when we say we are working the
2:03 pm
market closely just as we watch for imbalances emerging elsewhere in the economy. a particular interest to me is how agriculture might adjust with normal interest rate conditions. rising interest rates coincide with falling farm revenues and higher capitalization rates, a depressing combination for farmland values. even if crop rates are high, but rates are average, farmland values can fall by much as a third which most certainly would ruin the financial health of the farm sector. fortunately, as others mentioned, the industry entered this period with strong balance sheets, farm ratios are low, and they are well-capitalized. farm operators and banks strengthened the risk management practices using basic hedging strategies and markets to manage price and balance sheet risk that contributed to smaller increases and problem assets.
2:04 pm
nevertheless, i follow the basic lesson that bad loans are made in good times, and e remain watchful. i'll highlight a similar pose yum our bank had less summer. the consensus was important. it is a marked view that a very healthy consensus i should say, industry success relies on the ability to follow a single bath and the ability to shift quickly in economic landscapes and conditions. still, my nagging concern is current distortions in financial markets are increasing the risk of imbalances and markets will catch agriculture and the u.s. economy more generally by surprise once again. thank you. >> thank you very much. mr. yoder, welcome. >> thank you, chairman stabenuw, and ranking member roberts. it's an mon nor to be here to testify at your first hearing.
2:05 pm
i appreciate the kind introduction given to me. i have been farming a long time, a fourth generation farmer. i've had the opportunity to testify before this committee several times. i would like to address you as a farmer from ohio, a national association and a policy position. as i reflect over the years as to what agriculture means to me, i'm reminded of the old commercial that used the phrase, "you've come a long way, baby." today's agriculture is not my father's agriculture. we use programs to curtail carry overs, limited acres planted, and the freedom to farm in scene of this accident that gave us the full potential of the lands that they offered. however, we didn't develop the demand for the volume, and government had to help us and dispose of the production through market clearing measures. today, we have new technologies
2:06 pm
and new markets, especially for corn. while traditionally we used corn for livestock feed, today, we use a third of the production for biofuels without reducing the needs for feeds. this represents 10% of the transportation fuel today, has literally transz formed rural america. ohio alone generated $1 billion to ohio's economy and keeping small towns alive. the demand for corn and wheat and soybeans has never been stronger, and farmers will continue to respond by producing for all markets. today's agriculture is a bright spot in the economy. demand for commodities is an all-time high throughout the world instead of the supply driven markets, we are in a robust demand driven one where farmer's primary source of income is the market place. the current farm bill offered a
2:07 pm
change from previous ones with an option of a new tool to manage risk in conjunction with crop insurance. many of you worked hard to make this new tool a reality, and up thank you for that, especially you, chairwoman and your great staff. also to my own ohio senator brown, and his great staff too. all of his kitchen cabinet meetings he had around the state of ohio showed us how the system is supposed to work. unfortunately, # when the option of acre was offered initially by the offices, it was more complicated than it probably needed to be, however, as we look at how we're going to play out of future farm bill, i sure would hope and encirnlg us all to look to build this new road map including the risk management tools that we started with the last one. as a citizen and a tack payer, i think it's important -- taxpayer, it's important to
2:08 pm
readdress our core principles before we delve into policies for the future farm bill. i expect the vast majority of people in the united states, including those in agriculture, would agree that the u.s. government should balance the federal budget by reducing federal spending resulting in the reduction of the federal debt and eliminating inefficient spending in all sectors of the u.s. economy. now, if one accepts this initial principle, there's a much different perspective that emerges in thinking about how to shape and form our discussion. i think that most would agree that the new farm bill should include a policy that allows the market to provide a safe and reliable source of food, fuel, and fiber, but at the same time provides a strong safety net for times when unforseen revenue losses happen without our
2:09 pm
control. this happens with improved and equitable crop insurance in all reasons of the country. again, it would be easy for farmers to have the attitude to cut everyone's budget but ours, but what if we enhance the tools available in managing risk and growing our crops while continue to grow the new opportunities in the marketplace and do it with savings in the overall budget? the opportunities i have today as a farmer are the best i've seen in my lifetime. yes, lots more volatility, but a lot of reward. we have to deal with the volatility issues. i hope whatever we do, we can continue to grow these opportunities for today's farmers and for my son in the future as he takes my place on the farm. i thank you for your time and i look guard to your questions. -- i look forward to your questions.
2:10 pm
>> i'm sorry, we are discussing the fact that they just called a vote and so we want to hear from dr. outlaw and then ask questions. it's a question of how we rotate this. if -- okay, if you want to go vote and come back, and then you will -- i will leave you and do the same thing. we'll tag team. welcome, dr. outlaw. we appreciate you being here today. >> chairmanwoman stabenow, thank you for the opportunity to testify here on the outlook for u.s. agriculture based on the long history of representative farm research. we specialize in working at the farm level with a one of a kind set of data information that we collect from ranchers and farmers. this was formed by the dean of agriculture at the request of
2:11 pm
congress to provide them with a subjective research on financial operations throughout the u.s. with a focus on unbiased analysis of the impacts proposalled of changes. for more than 25 years, we have provided funding working with the agriculture committees in the u.s. senate and u.s. house of representatives providing staff objective research in the effects of policy changes. in 1983 we collected information from four to six farmers and ranchers that make up representative farms located in the primary production regions in the united states. currently, we maintain the information to describe and assimilate 98 operations and 28 states. we have several panels that have the original members or their children that we started with back in 1983. we have been here today to rely on face-to-face meeting with the
2:12 pm
panels. we partner with the university of missouri who provides projective prices and inflation rates. the results i'll discuss today were developed at factories in january 2011 baseline projections. under the baseline, 36 of the 64 representative crop farms are considered in good overall financial condition by the end of 2016. with 15 in moderate condition and 13 in poor condition. 34 livestock conditions are in good condition with 11 in moderate, and five in poor condition. there are a number of farms in moderate or poor conditions, this is the best outlook since 1995 when it appeared that commodity prices were in place for the foreseeable future. we know the prices were short lived. one of the most important and useful features of our work is
2:13 pm
the knowledge and insights we gain from the interaction we have with farmers and ranchers. in addition to our visits, we maintain communication throughout the year and periodically ask direct questions how they respond to policy changes. some of their most revealing responses were to questions regarding climate change, biofuels, and debt levels. we asked them to let us know how they were doing and what their concerns were for the future. in general, crop farmer ease said the outlook of favorable due to price of improvements for most commodities. while there is optimism regarding higher prices, the sudden downturn experience of 1995 and more recently in 2008 has most of the representative farm members nervous about the future. most responded that prices are sticky meaning they rise with commodity prices but fall slower as they experienced recently
2:14 pm
after 2008 price increases. there's a concern that congress will use the high prices as justification for reducing the safety net provided by the commodity programs. most felt the current price created a much more difficult business environment than they had experienced in the past. the dairy operators reflected that dollar circumstances and many farmers have several accumulated losses, particularly in 2009 which may have been the worst year ever for milk producers. the same sentiments was expressed by rice farmers. it's interesting to note that con ton farmers have not benefited from the cotton prices as the 2010 crop was priced or sold prior to the runup. all sectors continue to transition to a higher more volatile environment. we site higher prices, and they responded they have difficulty ensuring force, supplies due to drought, jut bidding, or
2:15 pm
operates for grazing land, or expect rises prices because feed lot profitability is strained by high calf prices. the areas of concern were their feeling that government regulation and specifically epa regulation, the operations drive up their cost of doing business and there also needed to be something done about the shortage of agriculture labor and a more workable program. madam chairwoman, this committees my statement. >> thank you very much. thank you to all of you. let me take a moment to ask some questions, and first to mr. creagh. in your testimony you tablinged about -- talked about the importance of agriculture and economic growth and stainability, usda and growth administers as you know with housing, business, community infrastructure, utility programs, from your
2:16 pm
perspective at the state level, can you share with us which programs are particularly important for continued growth in our rural communities? >> well, madam chairwoman, tz tough to -- it's tough to pick your favorite child, and i'd say from the get-go for michigan the increase in the support of the infrastructure is critical to the long term success. the president was up in the upper peninsula as you are aware of talking about broadband and some of the advantages of that bringing to rural michigan, and if we're going to compete in a global network and a global society, we have to have access to those markets through the appropriate use of broadband and high speed communication needs, but i'd have to say roads, rail, water will get you goods to market, so that would be the first one. second is usda rural development is integral to keeping people in their houses in michigan, and we
2:17 pm
appreciate the support that usda rural development did for michigan. >> thank you. it's interesting as i talk to people in michigan about how much there's not an awareness of how rural development touches all of the quality of life in rural communities. as you mentioned, housing as well as traditional infrastructure or the ability to have a fire engine or police vehicle or the other things that are so important to the quality of life. >> right. >> i'm wondering -- you mentioned, mr. creagh, several areas of growth and entrepreneurship among producing, specifically tourism, wine production, as you look down the road, are there other opportunities or areas where you see for potential growth, new areas in terms of agriculture?
2:18 pm
>> absolutely. michigan still is a processing state. we harvest the crop with a short period window, and winter comes. there's a ability that michigan can take advantage over time. as i mentioned, we are number one in 18 commodities. we still send cucumbers out of state to pickle. there's opportunities for increasing our dairy sector which is our number one sector. my favorite is cherries. moving from cherries, a baking industry, to a highly nutritional fruit, we lead the nation in the production of dried cherries. there are a number of opportunities to tie health and nutrition and ag production together to alleviate health concerns, put healthy food on the table and solve some long term problems. >> thank you. i'd like to ask all of our witnesses. when you look at the importance of the rural economy to each of
2:19 pm
our states and to our economy, what are each of you, or whoever wants to respond, could talk more about the larger impact that we see in rural communities from increased incomes. what are producers using? increased cash flows to invest in, how do we see that impacting the health of rural communities and the economy as a whole, where do you see this adding an impact for our communities? >> in our area, of course, when we have seen rising incomes, we've seen very significant increases also in investment on equipment, for example, and also as you build momentum, you also get increases in some of the production as was mentioned earlier, and even small
2:20 pm
manufacturing moves forward. it has multiple effects for rural america more generally. that's important. you see it become oriented within states where you have major hubs around that, and that's part of the process, but you do have follow-on from the increasing incomes generally. >> yes, mr. yoder, do you want to respond? >> i want to add that farmers have a tendency to have money and reinvest in their operation. in our area, there's a tremendous reinvestment in new machinery as well as new technology. there's lots of gps and auto steer and all that stuff. when there's money, there's going to be a time to reinvest in that. the other thing too as far as talking about biofuels, in ohio, we have around five ethanol plants running. that's around 300 real jobs, but
2:21 pm
that translates into best direct jobs and translates into 30,000 indirect jobs because of the community that produces more to the dollars that filter through the community so it's a big deal. >> we're done with our testimony, but dr. outlaw, if you wanted to respond to the question that i had ask, you're welcome to. >> okay. i would echo the same response that the previous panelists said. basically, when the farmers are doing better, they reinvest and purchase machinery. unfortunately, one of the secretary effects of that is that they probably get a little bit more leverage than they would have liked to have been and because of some of those interesting things about tax laws and able to write of losses, there's not a real big incentive to save which is unfortunate, but much like they
2:22 pm
said, the ag economy is in areas that's important to ag see that the effects to the rest of the economy are quite large. >> the distinguished senator from michigan has gone to vote, and you have noticed that there has been a coo. [laughter] we now will proceed to write the wheat section of the farm bill. [laughter] with a little more questions about the agriculture and it'll be all right. tom, let me ask you a question if i might. in your testimony you said something you probably said a lot in the last few years, including last year during your april 7, 2010 speech in santa fe
2:23 pm
that everybody should have a copy of. you said one of the effects of the interest rates with surging prices is that operators and investors in the midwest are buying up farmland, they are, bidding up the price, and they are, and you appropriately note that we also have this phenomena of the banking crisis of the 80s, and we do get through it finally, although there's several differences between now and then, and you point to the lesson of bad loans made in good times should be repeated time and time and time again. the old-timers at the coffee shop repeat it all the time. you said something about farm debt when i visited with you, something like going up in the last five years 7%, or is it seven years and 5%? >> i think it's the latter. >> okay. at any rate, that's a 35% increase. >> right. >> then we got some cash grants
2:24 pm
and other things and some of the figures really startled me in terms of what would happen when the bubble breaks. >> right. >> you know the bubble will break. i don't know if it's a bubble or what, but we're going to get back to seminormalcy in regards to crop prices it seems to me. maybe we won't. who can tell? what should we do policy wise to avoid a significant drop in farm prices and farm debt? >> well. s farmland values will -- well, the farmland values will proceed because the high prices that encourage people to invest, and as you mentioned earlier, you know, scale becomes important to operators, and so you're opportunities to -- your opportunities to buy additional land for scale has never been better in that sense, and so you have that momentum going forward. i think one of the things that we would try and do is we talk
2:25 pm
to operators and also to bankers who are involved in making more land loans than operating loans right now is that don't be fooled by loan to value ratios that are moving up. in other words, the land values going up because of the discount rate being low, and therefore you can lend 70% against it, and you are safe. if those land values are going up rapidly, and the implied discount rate is low, 3%, and normally it's 7%, that means you can have a 50% decline in that land value. we are cautioning the lenders, the bankers who are helping to facilitate the expanded acquisition of land with debt to be very careful about how they interpret their loan to value ratios and how to interpret the cash flows. you know, it's for a considerable period, these high prices remain, and then we find they don't. the only thing we can do is say
2:26 pm
be prudent. make sure your loan to value ratios are stronger than they normally would be because you are going to need that margin, and that's really what you do right now, and when interest rates rise, you get adjustments down because land values bring the interest down and because we watch the leverage carefully, we can handle that adjustment this time through. >> i know you are stepping down and retiring. thank you for your service and common sense, and gentleman, thank you all for your testimony. we've got yet another vote right after this one that necessitates that i depart as well, and also necessitates the chairwoman for coming back for which she apologizes. this has been a good first session. thank you for taking time out of your valuable time to come here and to testify. as always, everything that you
2:27 pm
say will be recorded for pos posterity, and it will not collect dust on some shelf. with that, this meeting is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
2:28 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
2:29 pm
[inaudible conversations]
2:30 pm
2:31 pm
the center of this battle over the budget in wisconsin. here is what the "wisconsin state journal" looks like. one of the way reporters' bylin e reporters on the senate is on the line. first of all, the missing legislators, apparently they have been found. is that correct?
2:32 pm
guest: they have been found. we talked to them. they say they don't know when they are coming back actually. they have been traveling around illinois. they were spotted in rockford at a belltower resort. they have kind of been traveling quite a bit. host: the requirement for debate to continue in the senate, there and 19 republicans. they need 20 members on the floor for debate to proceed? caller: for a vote on a fiscal measure, which in this definitely has a fiscal components. to vote on anything that has to do with the budget they would need at least one democrat there. host: we showed you "the washington post" this morning with reports that the democratic national apparatus has been getting involved, encouraging the protest, encouraging people to support the union and in members to be involved.
2:33 pm
have you seen evidence of that? guest: i seen a lot of tweets from organizing for america -- it does not feel like it is the vast majority. we have seen a lot of uw students either marching or heading up state street, the big st. from university to the capital. a lot carrying sleeping bags and pick it signs. a lot of teachers coming down from various parts of the state. it does not seem like the vast majority of people certainly that i have talked to are from out of the state. host: what will happen today? what is officially on the agenda and what is likely to happen in addition to that? caller: the senate says and they are ready to come back and they will try to take it up again. but when i talked to one of the democratic senators last night, just before midnight, he said they will stay away as long as it takes. that they don't have a plan to come back. i guess they could have changed their minds but they sound
2:34 pm
pretty resolved. so, it could actually go to the assembly first for a vote in the house. they recessed until 9:00 a.m. host: where are there any seats for compromise or deadlines that may force a compromise? caller: gov. walker said there really is no compromise on this issue. he has been very clear that he would not be open to any amendments that would undermine what he called the integrity or the main concept of his bill of limiting collective bargaining on anything but wages. we are trying to figure route how long the standoff can last and how the democratic -- long the democratic senators can stay away. the halls of a capital have been packed listens monday but growing every day. we dealt know how long the protests will continue.
2:35 pm
>> soon we will be taking you to the hillsboro campus of intel. president obama is expected to speak there momentarily about education and competition. >> and you're looking at the auditorium at hillsboro, oregon. we expect the president here momentarily. he has been touring the
2:36 pm
facility. this will be a group that is close to the public, and he will be speaking about education and competition. we are bringing you this live coverage here on c-span2, and the president should be coming in shortly. ♪ ♪ ♪ ♪
2:37 pm
♪ ♪ ♪ ♪ >> we are just waiting for the president to arrive here on the stage in hillsboro, oregon. one of the campuses of intel. he will be speaking to some of
2:38 pm
the people here about competition and about education. and after the president's remarks we will be taking you to the capitol visitor center for a press conference with the house democratic leadership. we expect to hear from house minority leader nancy pelosi, democratic whip steny hoyer and congressman james clyburn after the president's remarks. they will be addressing the bill that is being debated on the house floor right now. we are at about 18 hours more a debate on that bill, and about 109 mins ago. again just waiting for the president's comments here in hillsboro, oregon. ♪ ♪
2:39 pm
♪ ♪ ♪ ♪ >> while we're waiting for
2:40 pm
president obama to appear on the stage in hillsboro, oregon, at one of the campuses of intel we will let you know what his schedule is looking like for next week on presidents' day monday, the president has no public events scheduled. on tuesday he and members of his cabinet will be going to cleveland, ohio. the white house will be convening a winning of the future form on small business in association with cleveland state university in northeast ohio economic development organizations. and on wednesday meetings at the white house followed on thursday the president holding a meeting with the council on jobs and competitiveness at the white house. and on thursday night president and the first lady will be having a musical evening, and music legends and contemporary major artists will be coming to the white house for the motown sound and performance at the white house. celebrate black history month and motown records.
2:41 pm
waiting here for president's remarks on education and competition here in oregon. ♪ ♪ ♪ ♪ ♪ ♪
2:42 pm
♪ ♪ >> ladies and gentlemen, good morning and welcome. our program is just about to begin. as a courtesy to your colleagues will you please take a moment right now to silence your digital devices. we thank you. ♪ ♪ hi ♪
2:43 pm
♪ ♪ ♪ ♪ ♪
2:44 pm
>> ladies and gentlemen, please welcome the ceo of intel, paul otellini. [applause] >> good morning. good morning. what a great day. i want to add my welcome to this morning and in particular welcome governor over there. i thank you for being here. [applause] >> i'm excited to be here today to celebrate american innovation and american manufacturing. our country and his company have been built on innovation. and manufacturing has been at
2:45 pm
the heart of america's economy for over a century. technology in the semiconductor industry have been driving economic growth for the last 50 years. in fact, when averaged over the last five years the semiconductor industry in the nation's number one exporter. today we celebrate the construction of intel's new semiconductor manufacturing plant called b1 x. for the past two years i've been discussing the need to reignite innovation in the u.s. as a means to create jobs and wealth in our society. i believe the world of technology and a vibrant manufacturing base lies at the heart of creating this future. this is one of the reasons for our continued investment in oregon, and our commitment to build the translated this new factor will play a central role in sending intel's unquestioned leadership in semiconductor manufacturing from transistors
2:46 pm
and chips that it will produce will be the most dynamic platform for innovation that our company has ever created. together they will enable more capable computers, the most advanced consumer electronics, and mobile devices. the brains inside the next generation of robotics, and thousands of other applications that have yet to be invented. i'd like applause for a moment to give you a glimpse of what will be involved in creating such a technologically advanced operation. ♪ ♪ ♪
2:47 pm
♪ spee. [applause] >> wouldn't it be great if there was that easy and that cheap? [laughter] seriously, d1-x will be a vital addition to what is one of the most largest research sites in the world. building it would create approximately 3000 construction jobs, over two years. the structure will require 19 tons of steel, 40 miles of pipe, 13,000 truckloads of cement. when finished d1-x of a clean room as big as four football fields. it is scheduled for start up in
2:48 pm
2013 and it will be the first 14-nanometer microprocessor factory in the world. [applause] intel is a global company today, and proudly so. yet we think of ourselves as an american enterprise. intel generates three-fourths of its revenues overseas. yet maintains three-fourths of its manufacturing here in the united states. [applause] the company sets the bar for world-class manufacturing around the world. we believe in this country's power to create a future where america maintains its unparalleled global leadership and where jobs in the 21st century industries are created and flourish. i am pleased that the president and his administration have taken a number of steps to
2:49 pm
invest in innovation and education so that we are building the skills needed to achieve success in the 21st century, and to grow the economy. at intel, we believe that we will help create the future. building such a future requires more than just investments in technology and manufacturing. we also need to invest in educating and training the workers that will invent and manage the industries of the future. at intel, for example, over half of our 82000 person workforce have technical degrees. and nearly 8000 people hold a masters degree or ph.d. looking forward, we are concerned that there may be a shortfall of qualified experts in science and math in this country to meet the needs of our industry. there are two fundamental solutions to this problem. first, revitalizing math and science education will have qualified interested and motivated students.
2:50 pm
and tried increase enrollments in our grade graduate schools. then governments and businesses need to make sure that all of these graduates are given the opportunity to work in this great country. i want to commend the president for his leadership and focus on improving our science, technology, engineering and math education. he has taken actions including key steps like making s.t.e.m. a priority in his $4 billion race to the top competition, and his educated end of a campaign. i'm proud to say that over the last decade intel has invested nearly $1 billion in education around the world, especially math and science education. our intel teach program has already trained more than 9 million teachers worldwide with nearly half a million right here in the u.s. to integrate technology, into the voting process. the result is improved critical thinking and problem-solving skills. we view these efforts and our
2:51 pm
other education initiatives as vital investments in the next innovators, thinkers, scientists and entrepreneurs. this investment comes full circle when we can then hire the people we are investing in. i'm proud to announce that this year intel will hire 4000 new permanent highly skilled employees in the u.s. above and beyond the factory jobs that were previously mentioned. these new employees will focus on areas that expand the exploration of new materials, to create even smaller transistors, to products that we believe will transform the way that health care and education are delivered, to future technologies that involve augmented reality and computers that can read minds, or at least anticipate your needs. the investments i discussed today are long-term investments in the things that make innovation possible. they also send a clear message that the united states will remain the location for intel's
2:52 pm
most advanced technology developments in manufacturing. and i have saved the best news for last. i'm happy to announce another new multibillion dollar investment in america. intel will soon begin construction in arizona on a greater than $5 billion manufacturing facility that we will call tab 42. this will focus on process technology and beyond. when completed fab 42 will be the most advanced high-volume semiconductor factory in the world. this activity will create thousands of construction and permanent manufacturing jobs in this country above and beyond what i described earlier. my closing message is that the best way forward for us is to unleash the unmatched creative energies of the people of this country to transfer our manufacturing base for the 21st century. intel is proud to do its part in
2:53 pm
creating this promising future. with that, ladies and gentlemen, i am pleased to introduce the president of the united states. [applause] [applause] >> thank you. thank you so much. thank you, everybody. everybody, please have a seat. thank you so much. i am thrilled to be here. i want to first of all bank paul for that introduction. and i want to thank paul for agreeing to be part of our administrations new council on jobs and competitiveness. i look forward to our continuing conversations when we meet next week. i also want to acknowledge a
2:54 pm
wonderful governor, governor kitzhaber who is here. thank you so much for all the work that you are doing. [applause] >> and the mayor of hillsboro, jerry willie. thank you for the great work that you do. [applause] >> and i want to thank everybody here at intel for hosting us here today. we just had an amazing tour. one of my staff, he said it's like magic. [laughter] that's what he said. i had a chance to see everything from an electron microscope to the inside of your microprocessor facility, the clean rooms. and i have to say, for all the gadgets you've got here, what actually most impressed me were the students in a science project that i just had a chance to see. it gave them a chance to talk
2:55 pm
about things like quantum algorithms. and it gave me a chance to nod my head and pretend that i understood what they were talking about. [laughter] [applause] >> so that was the high school guys. then we went over to -- [laughter] eco-seriously. then we went over to meet some seventh graders. six girls, and it was wonderful, all girls, who had started a science project after school that involved legos. so i'm thinking, this is more my speed. [laughter] i used to build some pretty mean lego towers when i was a kid. i thought i could participate. only the students used their legos to build models, to build robots that were programmable to
2:56 pm
model brains that could repair broken bones. so i guess that's different than towers. [laughter] it's not as good. [laughter] the towers. [laughter] so i couldn't be prouder of these students, and all the work that they have done. in my state of union address, i said that it's not just the winner of the super bowl who deserves to be celebrated. it's also the winner of science fairs, and since the packers beat my bears, i'm reserving all my celebrating for the winners of the servicers this year. the science fairs. [applause] they deserve applause. they deserve our applause and our praise, and they make me
2:57 pm
optimistic about america's future. just as visiting this facility makes me optimistic about america's future. i'm so proud of everybody here at intel. not only because of what you do for these students or this community. but because of what you do for the country. a few weeks ago i went to the chamber of commerce, and i talked about the responsibility that american businesses have to create jobs and invest in this country. and there are few major companies to take this responsibility seriously as intel. in 1968, intel started as one of silicon valley's first startups. and as you grew in leaps and bounds in the '80s and '90s, you experience the competitive pressure of globalization. the changes in technology that may be cheaper for many computer companies to start hiring in manufacturing overseas.
2:58 pm
and over the years he had done some of this yourself. and yet by and large intel has played its best on america. as paul just mentioned, three-fourths of your manufacturing still happens right here in the united states. this year to hire another 4000 american workers. you will create good construction jobs upgrade their facilities and building new plants in arizona and right here in oregon. this kind of commitment has always been part of intel's philosophy. the founder of this company, the legendary andy, said he is always felt to obligations. one obligation is to your shareholders. but the other obligation is to america. because a lot of what intel achieved has been made possible in andy's words but a climate of democracy and economic climate and investment climate provided
2:59 pm
by our domicile, the united states. intel is possible because of the incredible capacity of america to reinvent itself and allow people to live out their dreams. and so the question we have to ask ourselves now is how do we maintain this climate that andy grove is talking about. how do we make sure that more companies like intel invest your, manufacture. no, higher here. in a world that is more competitive than ever before, it's our job to make sure that america is the best place on earth to do business. part of that requires knocking down barriers that stand in the way of a company's growth, which is why i proposed lowering corporate tax rates and eliminating unnecessary regulations. it also requires getting our fiscal house in order, which is
3:00 pm
why i have proposed a five year spending freeze that will reduce the deficit by $400 billion. and it's a freeze that will bring our annual domestic spending to its lowest share of the economy since eisenhower was president. now, to really get our deficit under control we're going to have to do more, and i want to work with both parties to find additional savings, get rid of excessive spending whatever it is, whether defense, health care, or spinning in the tax code in the form of loopholes. but even as we have to live within our means, we can't sacrifice investment in our future. if we want the next technological break that leads to the next intel to happen here in the united states, not in china or not in germany, but here in the united states, we have to invest in america's research and technology, in the work of our scientists, and our engineers. if we want companies like yours
3:01 pm
to be able to move goods and information quickly and cheaply we've got to invest in communications, transportation networks like new roads and bridges, high-speed rail, high speed internet. if we want to make sure intel doesn't have to look overseas for skills and trained workers, we've got to invest in our people, our schools, in our colleges. in our children. basically come if we want to win the future, america has to out build and out innovate and that educate and outhustled the rest of the world. that's what we've got to do. [applause] so today i want to focus on one component of that, and that is education. that's what i want to talk about today. over the next 10 years nearly half of all new jobs will require education that goes
3:02 pm
beyond a high school degree. times have changed their to use the be if you're willing to work hard you could go to a factory and you might be able to get a job that lasts 20 years. probably good benefits, a decent salary. these days those jobs are far and few between. many of the jobs that are going to exist in the future, that exist now like the ones here at intel, require proficiency in math and science. and yet today as many as a quarter of our students are not even finishing high school. the quality of our math and science education lags behind many other nations. as we just heard paul say, countries like intel struggle to hire american workers who have the skills that fit their needs. so we can't win the future if we lose the race to educate our children. can't do it. in today's economy the quality
3:03 pm
of education is one of the biggest predictors of a nation's success. it is what will determine whether the american dream survives. and so it's the responsibility of all of us to get this right. parents, teachers, students, workers, business and government. we are all going to have to focus on this like a laser. over the past two years my administration guiding philosophy has been when it comes to reforming our schools, washington shouldn't try to dictate all the answers. what we should be doing is rewarding and replicating the success of schools that have figured out a way to raise the standards and improve student performance. and so here's what we did. instead of pouring federal money into a system that wasn't working, we launched a competition. we called it race to the top. to all 50 states we said, if you show us reforms that will lead to real results, we will show
3:04 pm
you the money. race to the top turned out to be the most meaningful reform of our public schools in a generation. for less than 1% of what we spend on education each year, it has led over 40 states, 40, to raise their standards for teaching and for learning. the standards were not developed in washington. they were developed by republican and democratic governors throughout the country. because we know that other than parents, perhaps the biggest impact on a child's success comes from the man or woman who is sitting or who is standing in front of the classroom. we've also focus a lot on teaching, on teachers. we want to make teaching and honored profession in our society. we want to reward good teachers. we want to stop making excuses
3:05 pm
for bad teachers. over the next 10 years with so many baby boomers retiring from our classrooms we want to be. 100,000 new teachers in the field of science, technology, engineering and math. fields that will give the students the skills they need for the jobs that exist in places like intel. to ensure that higher education is within the reach of every american, we've extended -- we put them into other forms of taxpayer subsidies that used to go to banks and we put the savings towards making college more affordable for millions of students. and this year we want to make permanent our tuition tax credit which is worth $10,000 for four years of college. finally, to make sure anyone can get trained and prepared for whatever career they pursue we want to revitalize america's community colleges. not everybody needs to go to a four year college. so we have launched a nationwide initiative to connect graduates that needed job with businesses
3:06 pm
that need their skills. and we've drawn lessons from intel. four years intel has recognized the value of these kinds of partnerships between schools and businesses. this company understands that your success depends on a pipeline of skilled workers who are ready to fill high-tech jobs. so over the last decade you've invested $50 million to support education in the state of oregon. you've started programs -- [applause] that's worth applause. you started programs in engineering and technology as early as elementary school like those six girls that i met. you sponsored mentoring and engineering competitions for the poor and underserved high school students. your employees volunteer. some of you are probably here to volunteer as tutors in nearby
3:07 pm
schools and universities. you have helped train 7000 oregon teachers over the last 10 years. your science fairs, your talent searches are some of the largest and most prestigious in the world producing multiple nobel prize winners. and i suspect some of the students i met will qualify soon. [laughter] [applause] >> and we were so grateful that intel was one of the four companies that initially joined our administrations nationwide campaign to boost math and science education here in america. as part of a new organization called change the equation. so you guys have been pretty busy here at intel. you've given countless students a chance to succeed, and for that you should be very proud. but you're not just a good corporate role model.
3:08 pm
your corporation understands that invest in education is also a good business model. it's good for the bottom line. a lot of your employees were engineering undergraduate at oregon state for portland state, right? [applause] >> how many beavers here, by the way? [cheers and applause] >> you know my brother-in-law is -- [laughter] >> just wanted to point that out. they are young team but they are on the move. [laughter] >> but here's what we know. if you spark a students interest in math or science, who would have otherwise dropped out, you might not just change a child's life. you may nurture the talent of one day that discourage the breakthrough the changes this industry forever. in fact before i came here i read a story about a young
3:09 pm
university of oregon graduate. his name is a meal. and he joined intel as an engineer in 1993. after working with so many other employees who had doctorate degrees, tranforty said to go back to school and get his ph.d in chemistry at portland state university. and thanks to intel he was able to pay for his degree and keep his full-time job. during that time, intel is trying to find a faster, more efficient way to process your microchips but nobody could figure it out. that asked at least eight other countries and research labs for help. some said it couldn't be done. others worked on it for nearly a year with no success. so, they ask amil if you wanted to give it a shot. within three days, three days, he came up with a solution that is now saving this company millions of dollars a year. and i will not embarrass myself
3:10 pm
by trying to claim what his answer was. and most of you probably know how it works anyway. the point is, in investment in education paid off in a big way. for amil, for intel, for the millions of workers and consumers have benefited from that discovery. so for all that daunting statisticstatistics about educational failings as a nation, for all the naysayers predicting america's decline, you have been hearing them lately, stories like this give me hope. stories like these give me confidence that america will win the future. we know what works. we know how to succeed. we know how to do big things. and all across this nation, in places just like this one we have students and teachers, local leaders and companies are working together to make it happen. when it comes to keeping with other nations for the jobs in
3:11 pm
industry of the future, we are all on the same team. the american team. if we start growing in the same direction, i promise you there is nothing that we cannot achieve. that's what you're putting your it into. that's what you're putting in the schools and homes. that's what america will prove in the months and years ahead. thank you, guys. god bless you. [applause] ♪ ♪ ♪ ♪ ♪ ♪
3:12 pm
♪ ♪ ♪ >> president obama is speaking from hillsboro, oregon, campus of intel. we take you now to capitol hill for a briefing by house democrats. >> the country's number one priority. they have not put forth one jobs bill to create one job. the democrats and america's people have been repeating a simple refrain, show us the jobs. that the gop is not just ignoring jobs, they are cutting them. today we continue to debate a
3:13 pm
republican spending bill that cuts jobs, weakens the middle class and does not reduce the deficit. the bill will destroy 800,000 american jobs according to the economic policy institute. it will increase class sizes and take teachers out of the classroom. can you imagine what this means to people across the country? it means the class size in your school, the number may be increased. my own grandmother told me that was not a good idea, and she is 11 years old. she still doesn't think it's a good idea. it would jeopardize homeless veterans, make our communities less secure, threaten america's innovation and all the republicans can say about this is loss of jobs, large class-size, problems for america's homeless vets and the rest. so be it. from the beginning democrats
3:14 pm
have said will measure every by three just because it create jobs, doesn't reduce the deficit, does it strengthen the middle class? is continuing resolution fails on all three scores. and it is long past the time when we must work together to create american jobs, job creation of american growth. instead in recent days we've heard talk of a government shutdown. let's remove all doubt. we all have a responsibility to make sure that there is no government shutdown. the last thing that the american people need is for congressional republicans, or democrats, to draw a line in the sand that hinders keeping the government open. closing our government would mean our men and women in uniform would receive a paycheck and veterans would lose critical benefits. seniors would receive their social security checks, and the
3:15 pm
essential functions to airport security will come to a halt. president bush was in office when i was speaker. we met with in minority leader boehner and representatives of the administration to solve critical issues facing our nation, negotiate extenders package a couple of years ago. now almost three. to help the middle class in a financial package to save the economy. we are on the brink of a financial disaster your worked with administration and mr. boehner to halt that is deep -- we did like having to do that. democrats didn't create the problem. it was president bush's solution. republicans didn't want to vote for a. we cooperate with president bush. so the idea of cooperation in a bipartisan way to do the right thing for our country is one
3:16 pm
that we have to keep uppermost in our minds. as we see, it's interesting. but it's not, what needs to happen. what needs to happen, president kennedy told us we must establish priorities. it's not everything you can think of. it's what most, those things that must be done for the american people. and their top priorities is the creation of jobs, we must have a continuing resolution that does just that, make it a priority for job creation, deficit reduction and strengthening the middle class. and now i'm pleased to yield to the distinguished democratic whip, steny hoyer. >> thank you very much, madam leader. we have as the speaker indicated been here for two months. we have been here for two months, and we have not taken a
3:17 pm
single action to create jobs for america. in fact, we have done two major things that will undermine, in my view, jobs in america. first of all we adopt a rules package. what did that package provide for? an additional $5 trillion in deficits. you hear a lot about cutting spending, but the rules package provides for the cutting of revenues by $5 trillion without any way to pay for it. therefore, even if the republicans accomplish what they say they want to accomplish, $100 billion cut in spending, and we believe there needs to be a cut in spending, and not only that, the president of the united states has offered a budget which cuts over a trillion dollars over the next 10 years in spending. the fact is that republicans have now offered a continuing resolution which puts us in hold. we said we want to out educate,
3:18 pm
out innovate, and out invest and build. our competitors in the global marketplace. interns about educating the republicans have offered a substantial cut in education. they have made it tougher for young people to go to college. for families to be able to afford their kids to go to college. for 200,000 teachers to be kept on. they have cut 20,000 researchers from the national science foundation. undermined our ability to innovate and to be in the global market. and as tom donohue, the president of the united states chamber of congress has observed, they have cut investment in infrastructure which would have created tens of thousands of jobs so that, unlike the democrats who came
3:19 pm
into office to stabilize and to build and to create jobs, the republicans who went through the same election we did and heard america's cry for jobs and growth in the economy, their response has been simply political. we should not be surprised. i want all of you to ask yourselves what was the long-term impact of the contract with america? i think you'll be hard-pressed to say that the bills that were focused on in 1995 made a difference in america. and very frankly, in this the first two months i think you'd be hard-pressed to say that we have made a difference for america. that's unfortunate. we want to work with our republican colleagues. and i mean that sincerely. i've had opportunity during the first two months to sit down for his significant periods of time
3:20 pm
with mr. kantor, the majority leader. with mr. mccarthy, the republican whip. with mr. camp, chairman of the ways and means committee. and i've had an opportunity to also have a brief discussion with mr. hensarling, the chairman of the conference took and i told all of them we want to work together. we want to reach across, create common cause for solutions to america's challenges. i'm hopeful we can do that. one way that america told us very loudly in 1995 is not the way to do it is to shut down government. and i'm going to work very hard as the leader said with all of my democratic colleagues, and hopefully my republican colleagues, to make sure that we do not shut down our government. we don't want to do that. we hope our republican colleagues don't want to do that, but if the posture they take it is no way, our way or no
3:21 pm
way, then it is possible that will happen. but it will not happen if they work together, which is what we want to do. we saw the negative consequences of that in 1995. our republican colleagues that it would be politically advantageous. hopefully they do not repeat that mistake again. and now i yield to the assistant leader, mr. jim clyburn of south carolina. >> thank you. i think that all of us remember during our lame-duck session last, three months ago. we heard some chanting from the other side, where are the jobs? the last six weeks it's been anything but jobs.
3:22 pm
rolling back women's rights, consumer protections, making it harder for students to go to school, balancing the budget on the backs of working families, veterans and young people. and now they are putting social security payments and services at risk. the social security administration is responsible for processing benefit applications, issuing checks to recipients, and sending you social security cards to children. warned in a letter to its employees on thursday that it may have to furlough workers, if the proposed cuts to this budget are enacted into law. in the gop's so be it spending
3:23 pm
bill, republicans have have proposed cutting social security administrative funding by more than 9%. from 11.8 it was in in 2010, 210.7 billion this year. in addition, the republican proposal, $1.7 billion less than social security needs to keep pace with inflation and its rising workloads. these are the wrong priorities your democrats have said we will measure every effort by whether it creates jobs, strengthens the middle class, and reduces the deficit. democrats agree with president obama that we must out-innovate,
3:24 pm
out-educate, and out build the rest of the world. we believe we can live within our means and create jobs, invest in our future, and reduce the deficit, starting with an aggressive attack on waste, fraud, and abuse. i hope that when we get back from this break that we can work together on behalf of the american people to move our country forward. >> thank you very much. and as i said, mr. hoyer, this is the first time i heard him make some remarks about make it in america. because that is indeed what we must do. we must take in america so the american people will make it in america. and this week is the anniversary of the recovery package that mr. clyburn was speaking, talking about the republican,
3:25 pm
their lack of job initiatives that when we can one day after the present an ideal address, the house of represent past the highly package which saves 3.5 million jobs, president obama has democrats and congressional democrats job creation on day one. it's not enough. more needs to be done. that's why we want to see some initiatives on the part of our republican friends. i do want to just mention before going to the questions and answers that again, as we gather here in wisconsin right now we're watching an extraordinary show of democracy in action. wisconsin workers, teachers and public servants must have a seat at the table to fight for good wages and a safe workplace. i stand in solidarity with the wisconsin workers fighting for their rights, especially all the students and young people leading the charge again for fairness and for opportunity in their community. with that we will be pleased to take any questions.
3:26 pm
>> 1995 there was a large freshman republican class came into office. several months later the government shutdown through a early 1996. here we have a large senator freshman republican class. you get the sense that this class, they don't understand what happened in i.t. 95? do you see parallels here because they are so steel in a position where comes to cutting back the budget? >> we were all here at the time so i'm sure we all have something to say about that. but i don't want to characterize what they're understanding is of the issues. i just think it's important for all of us to recognize that we cannot allow the government to shut down. and again, it's important everyone to say what they would like to see happen, but they must establish mayor dick as we go forward. and none of us, the country cannot afford the luxury of political standoff.
3:27 pm
it's something you can't say so be it when it comes to the well being of the american people. so talking about what happened in the past it may be a nice academic exercise. the fact is we have a whole different set of challenges for the american people right now. and whatever it was and however urgent needs of the american people were, 16 years ago, it's all intensified now. so again, the republican platform of so be it cannot be how we perceive. it has to be let's see how we can make it happen for the american people. and it's up to the leadership of their party to bring them together around a set of priorities to take the negotiating table and to make sure that government does not shut down. >> i just want to add, i agree
3:28 pm
with the leader. looking back is not particularly useful and less you learn from the past. and what we learned from the past was the american people wanted an inefficient, cost effective governed. they understand government is necessary. they don't want to see it shut down. the lesson we learned in 1995 is one that occurred, they didn't like it. and they will not like at this time either, which is why i hope my republican colleagues, new or those who have been here, come together with their colleagues in the house and with our colleagues in the united states senate to reach agreement on moving forward. i think that's the key. and i hope that they will do that and we will see whether that is the case or not. the implications, however, have been recently that there are some who believe that their
3:29 pm
pledge is not subject to change. that pledge, of course, was made unilaterally. in december we would not have been able to keep middle-class taxes at the present level and not raise them and less we had reached agreement. i think we all ought to take a lesson from that as the legislative process is a process of coming together and reaching common ground. need to do that. >> i believe it was -- advised us years ago that if we fail to learn the lessons of our past, we are bound to repeat them. i would hope that our colleagues on the other side, or at least that will. >> i apologize. the planned parenthood --
3:30 pm
[inaudible] >> i also want to ask you about the series of health care reform law. we have seen the house repeal health care and now they want to defunded. what's your reaction? >> both of those occasions, let's talk about the second part of your question first. the health care, repeal of health care, withholding funds for the evocation of the health care legislation. of course, what that does is increase the deficit. the repeal of the health care bill, $1.3 trillion to our budget into the repeal that it suggests here is about a quarter of a trillion dollars. in cost to the taxpayers. again, it increases the deficit. it does not strengthen the middle class. but what you saw those members to have their today was to say we are repeating the end of discrimination on the basis of a
3:31 pm
preexisting condition. over 129 million people under the age of 65, have a pre-existing medical condition. almost every family in america have someone with a pre-existing medical condition. but today republicans in the congress said we want you -- to children who are under 26 years old, they can stay on their parents policy until they are 26. republicans out there said, my kids can take care of themselves. good for them in good for you. these kids want to take care of themselves, too. they need to have access to quality health care so that they can take the job they want, a job that matches the talent and aspirations. not just a job that might have health care. the list goes on whether it is closing the donut hole, whether it is ending discrimination
3:32 pm
against a medical condition, caps on benefits, lifetime or annual benefits. they have that the insurance company, they voted to put the insurance companies back in charge. i don't think this will happen. but that's what the vote was about today. increase the deficit, it weakens the middle class, and it did not strengthen -- it did not create jobs. in terms of planned parenthood, it was very interesting want me to listen to the debate because i have spent many years with mr. hoyer and mr. clyburn on their provisions committee. and sting and i -- we have the domestic and the foreign international family planning initiative, over and over and over again. republican colleagues on the committee would not give us the vote because they say we do not support family planning
3:33 pm
domestically or internationally. we do not support families domestically or internationally. it was stunning today because a mother of five today, brought my fifth child home from hospital. i feel i have some credentials in this arena. more than perhaps some of the people to speak about it on the floor of the house. so they didn't support family planning visited and what they did last night was used to planned parenthood as a whipping boy to disguise their opposition to family planning. the american people do every time we try to tell them it can't be true. it can't be true that they oppose family planning, that families could determine the size and timing of their family. well, they don't. but what was terrible to behold last night was for them to not come right out and say i'm not for family planning, but to say
3:34 pm
i'm not for planned parenthood, as to hide where they really are on this issue. when we have taken goes on in previous congresses, we have seen this in the votes. so again this is a very dangerous situation for the health of women across the country. women of the country and others hear about them, must pay attention to this issue. it's degrading to women. it's disrespectful. it doesn't make any sense, and if you want to reduce the number of abortions in our country you must commit to supporting contraception and family planning. they have never understood the. and perhaps they need a lesson in the birds and bees for them to understand that. because listening to the debate on the floor, it was so surreal. so surreal. what are they talking about? ..
3:35 pm
>> many of our pro-life members spoke out against that resolution. >> as you talked, there's decades of experience on the appropriations committee, and you had the power with the president in determining alternate outcomes on appropriations. today there's been votes on
3:36 pm
health care, planned parenthood, global warming, probably one in mexico city. do you believe president obama will have the same success that both president bush and president clinton had in driving outcomes, and do you think he'll be successful in knocking that stuff off? >> you raise a question that you heard me talk about because president's ultimately have the power to really fashion and direct spending and policy. they do so through their veto. you talked about a couple of presidents that did that, president clinton and president bush, and that's why i maintain it's president clinton that brought us $5.6 million in surplus. he did not allow the reduction of revenues or increase in spending that would have brought
3:37 pm
spending and revenues out of kilter. unfortunately, president bush did allow that so that we turned the deficit into a very substantial -- excuse me, surplus into a substantial deficit. now issue your question goes to the fact can president obama do the same? absolutely. not only do i think he can, i know he will do the same. he is committed, focused, and determined to accomplish the objectives he set forth for the american people in 2008. he didn't do anything that thought needed to be done to enhance the quality of life in our economy, to expand our economy, to make accessen health care for our people, and to make our nations saferrer here and around the world, but i don't know that the united states senate is going to present either the house or ultimately the president with a bill that
3:38 pm
will confront him with that alternative. i think the united states senate is not going to pass this bill. i don't think frankly any house republican believes the united states senate is going to pass this bill, and there has been no effort in my view to try to come to commonground on these issues. within our own house or between the senate and the house, i am hopeful, i'm hopeful that in the days ahead that mr. boehner and republican caucus and ourselves will come together with the united states senate to reach an agreement on how to move forward. i'm hopeful that on a budget we will do the same, and i'm hopeful we'll pursue what all of us know to be the central concern of our people, and that's jobs, so the answer to your question is i have little doubt that president obama will not only have the ability to, but will, in fact, shape the
3:39 pm
policies gong forward as he promised the american people he would. >> i'm convinced that the president is watching this debate on the cr very closely, and i'm convinced he is following the votes and results of the votes with the same kind of up sicive vision -- incisive vision he had to put his budget together. now, if you look at the president's budget proposal, there's some pain in there for everybody, but as i've gone through it, there's a tremendous balance in that that he is performed in doing it. if you looked at some of the cuts, the services that he's plussed up. for instance, the community
3:40 pm
health centers plussed up by a couple billion in order to provide the safety net that might be needed because of cuts that take place in other places in their budget. same thing with education. when people got a chance to look at what he did with pell grants. they saw that kind of incisive thought being put into it. i'm convinced that he will be watching this entire process on the cr with the same kind of insightfulness, and i think he'll use his pen to bring all of these a.q.s back into -- actions back into balance. >> mr. hoyer talked about the president's ability to do that and his focus on this.
3:41 pm
we talked about the vision that the president has. i would also like to say that the president has respect for the ideas of others. he knows if we're going to come together on this, we have to all come together on it, and that's why it would be important for the republicans to get serious about what their priorities are and not to bring 500 amendments to the table, but to say what really helps reduce the deficit, create jobs, strengthen the middle class. we think that criteria is nothing partisan about it. that's what's important to the american people, but it is, without any question, the president knows the seriousness of the situation and how we have to get the job done, but i remind you again. i did not like what president bush wanted to do on the stimulus package in the winter of 2000, was it 2007?
3:42 pm
i didn't like that, but the president wanted a tax cut, and what we said, okay, if that's what you want, how do we come together to help the people we're here to help, and we worked together to say they will be refundable so that everybody has some benefit on how we go forward. it wasn't our preference. it wasn't even a question of being in the same category, but it was about the same goal for us to stimulate the economy. nobody wanted to vote for t.a.r.p., and most of the republicans did not, but we didn't leave president bush hanging high and dry just because we didn't like the problem he created and the solution he offered. we knew something had to happen, and that's why we have a difference between us that i see at the moment that i hope will change. one is so be it, and the other from our side is let's make
3:43 pm
something happen, and president obama is about making something happen. >> last question. >> talk about your experience working with mr. boehner and former president bush. speaker boehner said he won't bring a cr to the floor. can house democrats work with him to adopt one with slightly lower levels to work out an ultimate deal on the spending package? >> i really don't know what mr. baner said he wasn't going to bring at current levels. there isn't really a great deal of time. the senate has four days to do their bill, reconcile these two bills. there may be more time that's needed, and we may need a continuation of the current cr. that's why i said earlier, we don't need any democrats, republicans, or democrats drawing lines in the sand about what won't happen if our goal is
3:44 pm
to make something happen that prevents the closing down of government. >> to avoid a shut down, can't you reach out and agree? >> well, we have. the president's budget is a good marker for where that is. we're talking about hundreds of billions of dollars cut. we're talking about saving $1.1 trillion over 10 years. i think the fact that these two things are coming forth in the same week shows the sharp contrast, but the strong commitment for making cuts for reducing the deficit, and on our side to create jobs to help the middle class, and we hope to see something like thatment again, in that room, it was the minority leader and the administration, and i was in constant fowch with the rest of our leadership on where our caucus was willing to go, and we were willing to cooperate, but
3:45 pm
it has to be something that does not undermind the strength of our middle class, creation of jobs, or reducing the deficit. >> thank you. >> two points if i may. the speaker doesn't say this often, but i don't know if i heard her say it publicly, but i want to say this now. when we put the t.a.r.p. together, that was president bush, but i remember the night very clearly. when these two people said we are going to put up the two-thirds, 120-100. i mean, we agreed to go two-thirds of the way. they do the other third. if you remember, they said they would, and at first they didn't, and we remember that weekend, speaker pelosi and leader hoyer said this must be done even if
3:46 pm
we have to go more than the two-thirds, and we did it. i think that in the case of corporation, that we -- cooperation, that we are willing to give on behalf of the american people. the speaker mentioned wisconsin. i want to mention wisconsin and ohio, and what we see taking place on the floor here in this congress. there's a certain philosophy in movement being played out all across the country. i hope the american people are watching this debate here, are watching the new governors in wisconsin and ohio, and see which party is a party of what the men and women who are
3:47 pm
keeping this country afloat and i might add the ones who are keeping this country safe and secure. this, to me, i hope the american people are watching very closely. >> thank you, all. [inaudible conversations] >> house democratic leaders taking questions at the capitol visitors center saying they want to prevent a government shut down and calling for cooperation across the aisle. they spoke at length about an amendment that passed prohibiting funding for planned parenthood. they are barred from using federal money for abortions. this amendment takes away funding entirely for family planning, birth control, and medical services, and it passed 240-185. members continue to work on the funding bill covering government operations from march through september of this year. the deadline to pass the funding
3:48 pm
bill is march 4 when current funding runs out, and the house and senate are out next week for the president's day holiday, so that leaves less time. it could be a late night on the house floor with a possible debate tomorrow. you can live it watch on c-span, and also on c-span.org where you can find debates on the measure from earlier this week.
3:49 pm
3:50 pm
>> defense secretary robert gates said on thursday the prospects for closing the u.s. detention facility in guantanamo bay, cuba are low. it's harder to release detainees because of the difficulties on certifies whether they'll return to the battlefield. the administration's 012 budget request for the pentagon, mr. gates talked about funding to expand after's security -- afghanistan's security forces by 70,000. he's jipt by chairman of the joint chiefs of staff. [inaudible conversations] [inaudible conversations]
3:51 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
3:52 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
3:53 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
3:54 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
3:55 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
3:56 pm
[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> good morning, everybody. the committee this morning welcomes secretary defense, robert gates, chairman of the joint chiefs of staff, admiral
3:57 pm
michael mullen for the department, and the associated future years defense program, and the posture of the united states armed forces, and we also recognize secretary hale, and welcome him here as well. we are thankful to all of you and your families for your dedicated service to the nation, and to the soldiers, sailors, airmen and marines at home and in harm's way around the globe, and to their families. your personal commitment to the welfare of our troops and their families shines through all that you do. the american people are grateful for that, and we are grateful and eager to help wherever we can. the department of defense is all federal agencies is currently
3:58 pm
operating under a continuing resolution, a cr. that exspires on -- expires on march 4, 2011. if the current cr is extended for the year, then the department's base funding, the $526 billion for fy2011, would be $23 billion below the original level of the original question of $549 million. secretary gates will describe to us this morning this situation as a crisis on his doorstep, and i hope that we will soon, as a committee, be in a position to enact a full year appropriation at an appropriate level and that the full senate adopts such an appropriation. at a time when we face a budget deficit in excess of a trillion
3:59 pm
dollars, and many in congress are convinced we need steep spending cuts to put our fiscal house in order, no part of the government, incoming the department of defense, can be exempt from close examination. the secretary of defense subjected that the department's budget to close examination, insisted on efficiencies on streamlines cutting and cancellations that add up to $178 billion over the course of the next five years. the fy2012 base budget request of $553 billion is $4 billion higher than last year's request, but is a reduction in inflation ajusted terms. we will be closely scrutinizing the secretary's efficients initiative and looking for additional efficiencies moving through the legislative process. the total defense budget which
4:00 pm
includes base funding for the department of defense and additional funding for overseas contingency operations or oco, the total defense budget declines from $708 billion in fy2011 to $671 billion in fy2012. that decline is due largely from our continued withdrawal from iraq which results in the budget for the overseas contingencies operations falling from $159 billion in 2011 to $118 billion in fy2012. even as the defense budget requests reflects difficult choices, it rightly requests increased funding for military personnel and health care including funding sufficient to continue initiatives supporting
4:01 pm
wounded and sick service members, continued research in the traumatic brain injury, tbi, post-traumatic stress disorder, and psychological health, and fully funds a variety of family support programs. notably, the budget request would reduce active duty army and arm strengths by 704 soldiers. they plan to reduce its so-called temporary end string by 22,000 soldiers in three years followed by an additional reduction of 27,000 soldiers between 2015 and 2017. as the services resize their forces according to anticipated demands, we must ensure that any reductions avoid unnecessary
4:02 pm
increased risk or stress on our service members. the budget requests also prioritizes funding for ongoing major operations in afghanistan and iraq. as senators reid and i heard in our visit to afghanistan and iraq last month, both of these conflicts are entering critical transition periods. in iraq, our forces are implementing the decision by president bush and prime minister to set forth in the 2008 security agreement to withdrawal all u.s. forces from iraq by december 31st, 2011. as we draw down, our goal is to leave behind an iraq that is stable because iraq will continue to need support in meeting its security needs. the budget requests includes significant funds for starting up the office of security cooperation within the u.s. embassy in baghdad to make our
4:03 pm
security assistance available to iraq. the transcigs from a dod lead to a state department lead for numerous bilater rail activities in iraq -- bilateral affidavit of activities in iraq is only successful if they receive the resources thigh need to take on these missions. in afghanistan, july 2011, many mark the date set by president obama a little over a year ago for the government of afghanistan to take more and more responsibility for afghan's security and government and by july 2011 for the beginning of reductions in u.s. forces in afghanistan. the president's decision to set the july 2011 date has increased the urgency as general caldwell
4:04 pm
put it to prepare the leaders for this transition. general david petraeus told us afghan officials are preparing president karzai on which districts should be transitioned to a security league in the coming months. during our visit to afghanistan, we saw significant signs of progress over the last six months, although great challenges remain. the afghan army and police surged by an additional 70,000 over the last year, and are on track to meet the current target of 305,000 afghan security forces by october of this year. president obama's budget request for fiscal year 2012 includes a substantial resource to continue supporting those afghan forces which bring closer the day when
4:05 pm
afghan troops will bear the major responsibility for their nation's security, which in my judgment is and always has been key to success in afghanistan. on february 15, 2011 in an op-ed that appeared in the chicago tribune, it was said that well the international community extended blood and treasure for this just cause, the remarkable story of the surge of afghans, of a people committing themselves to defense of their country, is a reason to hope for a successful long term outcome. in an e-mail message to me, general caldwell, in charge of training afghan sources followed up that op-ed by saying, "it has become truly the untold story of the last 15 months. in that time, afghan men and women swelled the ranks of the
4:06 pm
afghan national security force to levels more than double the u.s. and nato surge and while the enormous increase in quantify is significant to the security of afghanistan, our focus on the improvement of quality is even more important." those two documents to me from general caldwell will be made part of the record. the administration is also considering a proposal to grow the afghan army by 35,000 men, and the afghan police by a similar number which would bring total afghan security force levels to 378,000 by the end of 2012. these additional forces would add important enablers, logistics, engineering, intelligence, and others that would reenforce and sustain the transition of responsibility for afghanistan's security to the
4:07 pm
afghan security forces. i support this proposed increase, and i know from our conversations that secretary gates and admiral mullen support it as well. i have urged president obama as recently as last friday to approve that request. in the field afghan security forces partnered are coalition forces employed in helmand and kandahar. u.s. and afghan forces are taking the momentum from the insurgency, particularly in former taliban strongholds in the south. the afghan army is increasingly in the lead in planning and executing operations. that's what the taliban fears the most, afghan security forces opposed to foreign forces out in front providing security to the afghan people. as support for the afghan army and police grows, lower level insurgent fighters are beginning
4:08 pm
to reintegrate into afghan's society. improving afghan government proves a major challenge to success. the government in kabul is largely absent from daily lives and corruption and mismanagement remain major obstacles. we must ensure the forces are prepared to address other threats in other places beside iraq and afghanistan. we've obviously must remain atentative to the threats around that region and throughout the world. i outline those threats in some detail in the balance of my opening statement that i will put that in the record rather than reading it at this time, and i will turn now to senator mccain. >> thank you, mr. chairman. i want to join you in welcoming secretary gates and chairman mullen and secretary hale to discuss the president's budget request for fiscal year 2012, and its impact on future years for the department of defense. secretary gates, you were asked
4:09 pm
to return to public service at the time when this country was embroiled in the turmoil of an unpoll pew lar war -- unpoll -- unpopular war and critics were abounding. your tenure marked by a victory in iraq, a new strategy to defeat enemies in afghanistan, and the department's lead on humanitarian responses around the world. your service will also be noted for the substantial reforms of the defense acquisition process and your decisive actions to stop wasting taxpayers' funds on unneeded and outdated systems. on behalf of my fellow citizens, i thank you for your outstanding service. i view you as one of the greatest public servants that i have ever had the opportunity of serving with. today, we are faced again with a demand for change. we're facing the harsh reality
4:10 pm
that run away federal spending put this country on a sustainable path, and i agree with admiral mullen who observed in his written statement, "our debt is our greatest national security threat. this requires congress to provide more leadership than it has shown in the past to restore fiscal responsibility. i believe we took a step in the right direction in last year's defense authorization agent by stripping the earmarks from the bill. since then, both house and senate imposed moratoriums on earmarks for 2011 and 2012. i commented my colleagues in advance for restraining themselves from using earmarks, and i know it's tough for some. i hope, mr. secretary, you reenforce the president's commitment made during the state of the union address and recommend a veto of any 2012 defense bill that contains
4:11 pm
earmarks. i'm concerned about the joint strike fighter. i know you are. we had many briefings, discussions, but it is a soirs of great frustration to you and to me and to members of this committee, but most of all, it has been an incredible waste of the taxpayers' dollar, and it hurts the creditability of our acquisition process, our defense industry. it reenforces the view of some of us that the military industrial congress noel complex that president eisenhower warned us about is alive and well. i hope that we can make your position absolutely clear to the senate today to prevent further wasteful action by congress that will deny the resources it really needs, but at the same time, give us the kind of assurance the f-35 can be put on the right track.
4:12 pm
i believe that as we move to try to reduce the deficit and the debt, almost everything is going to be on the table. overall, the base budget request of $535 million is $13 billion less than the amount prompted last year. i commend your effort to get ahead of the cuts to improve the efficiency of the department, your decision to reduce the number of civilian officials, free civilian pay, and halt the process of expanding the civilian work force are sound decisions. i worry that we might, however, do some things that might cause us to see what we saw again in the 70s and the 80s. reducing fly r hours, -- flying hours, postponing needed facility repairs are not true savings, and i fear the possibility of a return to what
4:13 pm
we once knew as a hallow army. i said the defense department doesn't deserve a special pass from spending taxpayer's dollars, but i've said that the savings we identify must be reinvested in critical defense priorities. one example of this reinvestment is the increased efforts to combat the trafficking of drugs and illicit materials through mexico. this has become an issue of national security, and i look forward to working with you and our allies in mexico to combat this scourge. yesterday, you stated regarding the u.s. president's in iraq, and i quote you, "certainly on our part an interest in having an additional presence and the truth of the matter is iraqis will have some problems that they're going to have to deal with if we are not there in some numbers." i agree. we are now scheduled to be completely out by the end of
4:14 pm
this year. i think it's time we engaged in active discussions with the iraqis as to their future needs as well as any threats there might be to our national security if there is a complete withdrawal and by the end of this year. in addition to iraq, we'll still have 98,000 u.s. forces in afghanistan. i expect our troops remain there until they are no longer needed. a couple weekends ago u.s. forces i -- ago, i was in mew nick. they said you're beginning to withdrawal in the middle of 2011, why shouldn't we say we're beginning to withdrawal? i think one of the worst announcements ever made as far as the con flictd in a war -- conflict of our war and conflict in afghanistan was the statement that we would be, "beginning withdrawal in 2011."
4:15 pm
glad to see 2014 is now the operative year, but it still is very unsettling to our allies and encouraging to our friends friends -- our enemies. success of the mission in afghanistan must be a sure dawn of the sacrifices of our brave men and women as well as coalition partners who fought, died, and have been injured there. mr. secretary, admiral mullen and hale. we face challenges ahead that require your skill and tenacity. i thank you, mr. chairman. >> thank you, senator mccain. we have a quorum here in a moment, and then i'll ask approval of a number of nominations and the committee budget. before i do that, though, i just want to say, mr. secretary, i join and concur with senator mccain in his comments about you and your ten year here as secretary of defense.
4:16 pm
it's been extraordinary number of years. you have brought great capability, objectivity, thoughtfulness to the job, and great strength in independence and courage, and i very much commend you for it. i look forward to many more times when you will be before this committee, and i'm sure that you do too. [laughter] i don't want this to sound like it's kind of like anywhere near the end of your tenure here. i discussed the matter of the budget with senator mckaine, and i -- senator mccain, and now i ask to approve authorizing of our committee march 1 of this year through february 28, 2013. >> second motion. >> the funding resolution is consistent with the joint
4:17 pm
majority leader and republican leader february 3rd agreement on committee funding and with the funding guides provided to us by senate rules committee on february 7th. this matter is time sensitive. all committees have been asked to report their budgets to the senate by not later than today. i now entertain a motion to favorably support this resolution. >> so moved. >> second. all in favor say afghanistan and aye, opposed nay. the ayes have it. there's discussion on the rules, and i ask everybody to read the rules within the nec week, and we will take up the matter of the rules on monday or tuesday after we return. we also have in front of us a 670 pending military nominations. all nominations have been before the committee. the required length of time. is there a motion to favorably support the nominations? all in favor, aye.
4:18 pm
the ayes have it. motion carries. i call on you, mr. secretary. >> senator mccain, members of the committee. i appreciate the opportunity to appear before you to present the president's budget request for fiscal year 2012. first, i thank the members of this committee for your outstanding support of the department of defense, but especially your support of the men and women in uniform serving in a time of war. i know you will join me in doing everything to ensure they have everything they need to publish their mission and come home safely. the budget requests pented today includes a base budget request of $535 billion and an overseas contingency operations of $508 billion. this took place in a two year effort to reduce overhead and
4:19 pm
reign in personnel and contractor costs. all for the purpose of preserving the global reach and fighting strength of the america's military in a time of fiscal stress for our country. in all these budget requests will continue to reform our efforts to fund modernization programs needed to prepare for future conflicts, reaffirm and strengthen the nation's concern for an all volunteer force and ensure they have the resources and support they need to accomplish their mission. my submitted statement has more details of the request. now, i want to take this opportunity to address several issues that are subject of debate and concern since i announced the budget proposal last month. first, the serious damage our military will suffer by operating under a continuing resolution where we're receiving significant funding cuts during
4:20 pm
fiscal year 2011. second, the projected slowing and slowing over the five years, third, the reducing of the size of the ground force, and fourth, savings to the program of work e retirees. i express the hope that the senate will continue to reject the unnecessary extra engines for the f-35 as it did the last time the senate spoke to this issue in 2009. i want to start by making it clear that the department of defense will face a crisis if we end up with a yearlong continuing resolution or a significant funding cut for 2011. the president's defense budgets request for 2011 was $549 billion, a full year continuing resolution would fund the department at $526 billion. that's a cut of $23 billion. the damage done across the force
4:21 pm
from such reductions would be further magnified coming halfway through the fiscal year. i'll be clear. operating under a yearlong continuing resolution or reduced funding that that entails would damage procurement and damage programs causing delays, rising korsts, no new program starts, and serious disruptions in the production of some of our most high demand assets such as uav's. cuts in main -- maintenance forces flights to be grounded. cuts in operations mean fewer flying hours, fewer steaming days and cut backs in training for home stationed forces, all of which directly impacts readiness. similarly, some of the appropriations proposals under debate in congress con contemplate reductions up to $15 billion of the president's original request.
4:22 pm
i recognize that given the current fiscal and political environment, it is unlikely that the defense department receives the full fy11 amount. based on a number of factors based on policy changing that was force the by the continuing resolution, i believe the department can get by with a lower number. however, it is my judgment that the department of defense needs an appropriation of at least $540 billion for fiscal year 2011 for the u.s. military to properly carry a missions, maintain readynd, and prepare for the future. that brings me to the reduction in the defense budget top lying over the next five years. to begin with, this so-called cut is to the rate of predicted growth. it's still projected to increase in real inflation adjusted dollars before eventually plantenning out. more significantly, as a result of the efficiencies and reforms
4:23 pm
taken over the past year, we have protected programs that support military people, readiness, and modernization. these efforts have made it possible for the department to absorb lower projected growth in the defense budget without sacrificing military capabilities. in fact, the savings identified by the services that allowed our military to add some $70 billion beyond the program of record towards priority needs and new capabilities. of the $78 billion in proposed reducks to the five year defense plan, about $68 billion comes from the combination of shedding access overhead, improved business practices, reducing personnel costs, and from changes to economic consumptions. only $10 billion of that five year total is directly related to military combat capability. $4 billion is from restructuring the joint fighter program, a step driven by the system's
4:24 pm
development schedule that would have taken place irrespective of the top line. the rest, about $6 billion, resultings from the decrease in the army and marine corp. in 2015, a decision i'll address now. four years ago, one of my first acts after defense secretary was to increase the ground forces. the army by 65,000 to a total of 547,000 and the marine corp. up to 202,000. at the time the increase was needed to relieve the force as the surge was getting under way. to support the latter plus up, the leader plus up of troops in afghanistan, i authorized a further temporary increase in the army of 22,000, an increase also planned to end in 2013. the objective was to reduce stress on the force, limit an eventually end the practice of
4:25 pm
stop loss, and to increase troops, home stationed dwell time. as we end the u.s. troop presence in iraq this year according to our agreement with the iraqi government, the deployment demands on the force are decreasing significantly. three years ago, we had 190,000 troops combined in iraq and afghanistan. by the end of this calendar year, we expect there to be less than 100,000 troops deployed in both of the major post 9/11 combat theaters. virtually all forces in afghanistan. this is why we believe that beginning in fy2015, the u.s. can with minimal risk begin reducing end strength by 27,000 and the marine corp. by 15,000-20,000. these projections assume that the number of troops in afghanistan will be significantly reduced by the end of the 2014 in accordance with the's and nato's strategy. if we are incorrect, there's
4:26 pm
time to adjust the size and schedule of this change. it is important to remember that even after the planned reductions, the active army in strength continues to be larger by nearly 40,000 soldiers than it was when i became secretary of defense four years ago. i should also note that these reductions are supported by the army and marine corp. leadership. timely, as you know, sharply rising health care costs are consuming an ever-larger share of the didn't's budget growing from $19 billion in 2001 to $52.5 billion in this request. among other reforms, this fy1 budget includes modest increases to role fees, medicare increases for working age retirees, most of whom who are employed while receiving full pensions. all six members have strongly endorsed these and other cost saves reforms in a letter to congress. i understand that any kind of
4:27 pm
change to these benefits prompts vigorous political opposition, but let us be clear 6789 the current tricare arrangement, one in which fees have not in connection withed for 15 years is unsustainable, and if allowed to continue, the defense department risks the fate of other corporate and government bureaucracies that would ultimately cripple personnel costs, in particular, their retirement benefits packages. the department's savings and reforms combined with a host of new investments makes it possible to protect the u.s. military's combat power despite the declining rate of growth and flattening of the defense budget in five years. as a result of the savings identified and reinvested by the services, our military will be able to meet unforeseen circumstances, buy new ships and fighters, develop a long range bomber, boost the cyberwarfare
4:28 pm
capability, and buy more of the most advanced uav's, but i note this will only be possible if the efficiencies, reforms, and savings are followed through to completion. in closing, i want to address the cost for some quarters in deeper cuts to address this country's face call challenges. i remind them over the last two budgets, we have canceled access programs that would have cost more than $300 billion if seen through to completion. additionally, total defense spending including war costs will decline further as the u.s. military withdraws from iraq. we still live in a very dangerous and often unstable world. our military must remain strong enough and agile enough to face a diverse range of threats from nonstate actors attempting to acquire and use weapons of mass destruction and sophisticated
4:29 pm
missiles to more traditional threats of states building up forces and developing new capabilities targeting our strengths. we shrink from the global security responsibilities that are payroll. entrenchment could lead to costly and tragic consequences later indeed as they have in the past. we should learn that the reduction of the size and strength in the u.s. military makes armed conflict more likely with an unacceptably high cost in american blood and treasure. mr. chairman, i look forward to working through this next phase of the president's defense reform effort with you and your colleagues in the weeks and months ahead to do what's right for our armed forces, and what's right for our country. thank you. >> thank you very much, mr. secretary. >> thank you mr. chairman,
4:30 pm
senator mccain, and distinguished members of the committee, i'm honored to appear before you to discuss the president's defense budget. before i do, however, let me echo secretary gates comments about the real dangers inherent in failing to pass this year's budget. fiscal year 2011 continuing resolution is carried forward not only reduces the account by $23 billion, but declives us -- deprives us of supports the troops and their families. . . .
4:31 pm
in-house balance global risk first-rate mind organizations, smarter acquisition and prudent modernization. the army, for us, we'll cancel procurement the service of air missile and then on my website launch, but will continue production of the joint vehicle
4:32 pm
and spearheaded, the development of the windows family of armored vehicles. the navy will give up its second fleet headquarters, reduces manpower assured an increase of just a multiyear procurement for ships and aircraft, allowing it to continue to develop the next generation missile submarine and purchase 40 new fna teams and for littoral combat ships and another lpd 17. like the army, reduce the strength starting in 2015, but they we will reinvest the amphibious vehicle and the light armored vehicle, even as they advance a new concept of operations and restore much of their naval expeditionary skills. in the air force will be about to continue development of the next tanker, a new bomber and
4:33 pm
modernize its aging fleet of f-16 fighters. all the while finding savings of more than dirty $3 billion to reorganization, consolidation and reduce facilities requirements. none of this non-sold come on the backs of deployed troops. we are asking for what $84 billion for readiness and training, nearly 5 billion for increased isr capabilities and more than 10 billion to recount our rotary aircraft fleet. these funds plus those requesting to help the partner capacity in places like afghanistan, pakistan, iraq and yemen all speak to the emphasis we are placing on giving her chirps and their partners in the field everything they need to do the typical jobs we've asked of them. we must also give them and their families everything they need to cope with the stress and strain of 10 years of war. that's why i'm so pleased with
4:34 pm
the funds devoted to this proposal, almost three quarters as much as the 2 billion budget for operations and maintenance personnel, housing and health care issues. as you may know, the chief and i have a rare 24 starter letter to congress six racing aren't qualified to port for military health care program changes included in this budget. besides equity across all health care programs with beneficiaries in health care delivery providers having the same providers having the same benefit and equivalent payment systems regardless of where they live or work. that in turn led us to propose increases in tri-care enrollment fees for working age retirees. these increases are modest and manageable and leafy is well below the inflation-adjusted out-of-pocket costs set in 1995, when the current fees for bush. we sincerely hope you will see fit these increases. please note that we will
4:35 pm
continue to invest wisely in critical care areas to include research, diagnosis and treatment of mental health issues symptomatic brain injury and enhance access to health services and new battlefield technologies. we understand the changes to health care benefits cause concern among the people we serve in the communities in which we receive care, but we also understand and hold it at our obligation to care completely for those who have borne the brunt of these wars as well as those for whom the word never ends. i am convinced that we haven't begun to understand the toland dollars m. in dreams that extract from our people. as a grandson and granddaughter says that still struggle to comprehend the full scope of the horrors those men that conceal. so till at grandchildren have to come to grips with the winston dean and grief unspoken, unless of course we get afraid.
4:36 pm
i believe the investments we're making a wound care family readiness will pay off in that regard, but it will take time and patience and money, three things we've seen so rarely to possess in this town. that brings them back to this particular budget request. this limited resource and two were some progress but we should be prudent in defining our priorities and controlling costs and inflating our thirst for more and better systems. we should also be clear about what the joint force can and cannot do, just as we should be clear about what we expect from our interagency and international partners. our global commitments have not shrunk. if anything, they continue to grow. in the world is a lot less predictable amount and we could've ever imagined and we need look no further to see the truth in. foolhardy would it be for us to make hasty judgments about the benefits, tangible and intangible that are to be derived from forging strong
4:37 pm
military relationships over his knees, such as the one we enjoy with egypt. changes to those relationships and either aid or is this an odd and either aid or is this an odd to be considered only with an abundance of caution and a thorough appreciation for the long view, rather than the flesh of public passion and urgency to save a buck. the $1.3 billion to provide the egyptian military each year has helped them become the capable, professional force they are and in that regard has been of an comfortable value. of equal or greater value is increased appropriations for the state department and our request in this budget for something called the global security contingency fund, a three-year pooled fund between the pentagon and state that will be used to build partner capacity, prevent conflicts and prepare for emerging threat. the request is modest and an
4:38 pm
the request is modest and an initial $50 million appropriation along with the press for authority to reprogram additional foreign or $2 million if needed. but what it will buy us as an agile and cost effective way to agile and cost effective way to batteries on to unforeseen needs and take advantage of emerging opportunities for partners to secure their own territories and regions. we must get more efficient, but we must also get more pragmatic about the world we live in. we can no longer afford programs unnecessary organizations without sacrificing fighting power. we can no longer afford to put our investment in future capabilities are relationships that preserve that power across the spectrum of conflict. i've long said we must not be exempt in the defense department from belt-tightening peer but in truth there is little discretionary about the security we provide our fellow citizens. pets can reasonably only go so
4:39 pm
far without telling the fours. in my view then this proposed budget on the balance be achieved by cher and represent fiscal responsibility and sound national security. i would be remiss indeed if i did not a lot the incredible effort of our troops overseas and their families. as they finish one war in iraq and begin to turn corners and asking if and. i know you share my pride in them and their families in your support has been superb. i know you'll keep them foremost in mind as you consider the elements of this proposal. i thank you for your continued long-standing support of our men and women in uniform and their families and i look forward to your questions. >> thank you so much, admiral mullen, for your eloquent statement in your great service yu-gi-oh.
4:40 pm
[inaudible] we have a seven minute first-round. secretary, you indicated we are on track to end the presence of our combat troops in iraq and the end of this year is decided upon by president bush. do you continue to support that decision? >> yes, i do. >> and are you planning to begin reductions of our troops in afghanistan by july this year as ordered by president obama with the piece to be determined of the reduction determined by conditions on the ground. do you support that decision? >> yes, sir. >> can you tell us why? >> frankly, this was the most difficult part of the afghan strategy going forward for me to
4:41 pm
come to support. i steadfastly, some on this committee will remember come as advised he opposed any deadlines in iraq. in iraq. and so came to this was certain skepticism. but i also realize that there is a difference between iraq and afghanistan in this respect. the truth of the matter is the iraqis want us out of the country as quickly as possible. on the other hand, the afghans at least a certain number of them would like us to stay forever. they live in a very dangerous neighborhood having u.s. forces there to support them and help them often in place of their own troops is something they would like to see. it seemed to me we needed to do
4:42 pm
something that would grab the attention of the afghan leadership and bring a sense of urgency to them of the need for them to step up to the plate to take ownership of the war and to recruit their own young men to fight. and i think the comments you quoted earlier from general caldwell has illustrated that over the last year or so the afghans have in fact done this to a considerable degree, particularly in terms of their own troops. i must say i was very pleased to have -- and i recognize the risk of the message we were all ascending to our adversaries to this taliban. however, it seemed to me that if the taliban was messaging to all of their people that we were leaving, our troops were all leaving in july, that they would be in for a very big surprise, august, september and a sober when we were still hunting them down and bury large numbers. so on balance -- and i will say
4:43 pm
it was a close call, but i came to believe it was the right thing to do. i must say i very much support and applaud nato's decision to accept the idea of full turnover of security responsibilities to the afghans. that book ends july the 11th statement and let everybody know that we are not leaving precipitously. we are going to do this based on conditions on the ground and we will continue to carry the fight. >> admiral mullen, do you want >> admiral mullen, do you want to have anything to that? do you agree with that the secretary said or do you have a different view? >> no, i agree with that. but it's a tough part of the whole decision process, certainly not the signal that we aren't seen as one is of great
4:44 pm
concern. and at the same time, send them a message that we in fact are going to get to a point where we turn this over and to them i think was very important. and i've seen the effects of that in their leadership, in the military and in the police. it has given them a sense of urgency that they didn't have before the decision was made. i also think with respect to taliban specifically, with where we are right now -- we've got a lot more things to worry about in terms of just how well they are doing is they are not doing very well and they know we're going to be there beyond july and a really bad year. but that doesn't mean this year will be tough. it will be very difficult on both sides, but we've made a lot of progress because we committed the resources to get this right.
4:45 pm
>> how about the size of the afghan security forces? there is a request proposal currently under consideration to increase the size of the half and national security forces by around 70,000 personnel. that would raise the target and strength for the security personnel at the afghans to about 378,000. now those forces as they now those forces as they indicate would include some key enablers, including intelligence, logistics. as i also indicated how we spoke with the president twice on this subject in very strongly support the increase that is even the increase that is even considered for reasons which you just talked about and which i talked about in my opening statement in terms of the importance of the afghan security forces taking responsibility for security. they're very much supported
4:46 pm
afghan people and they are targeting an enemy that is attested by the afghan people with the taliban. our partnering with the security forces has really improved greatly. many more partnerships between our forces and the training is intense and very successful. the operations are joined. we witnessed that were there in kandahar. our question both of you, secretary gates, and admiral mullen is the following. do you support the proposal to increase the size of the afghan national security forces has been considered? >> first of all, i would say that we've all recognized from the beginning that being able to turn security over to afghan forces to do with integrated taliban was our ticket out of afghanistan and to accomplish our goal and make sure were not attacked out of there again.
4:47 pm
i think the issue that is under discussion within the administration was a request from the commander. and the issue is under discussion in no small part because of the question of sustainability. how big an army can we afford? because let's not kid ourselves. nobody else is contributing to this in any significant way. and we have in our overseas contingency operation budget for fy 2012, $12.8 billion to pay for the afghan national security forces. so the question is, how long can we afford to do that? and you cannot do that indefinitely. so then, can you look at an increased number of afghan forces in the same terms and are served as something that is temporary until the problem get
4:48 pm
solved and then those numbers again to go back down again. and this is one of the big issues and i expect a decision in the fairly near future, but this is really the core issue that i think is under discussion. >> chairman, i think you know this actually is a recommendation was t..from somewhere between 352,000 to 378,000. that the range. i certainly share the earned secretary is spoken of in terms of the sustainability of this. and you also care arise in your opening statement a specific recommendation for me. we are still very much in discussion inside the administration under this comes out. as the secretary said i think in the near future, we will have that. there's a lot of issues at play here. none of us disagree with your
4:49 pm
assertion or your statement about the importance of this part of the mission. training them and turning it over to them has gone incredibly well over the course of the last year. so how fast we can move, how much more there should be. they are still much in discussion. the comprehensiveness of the issues associated with this are being reviewed as we speak and i think it will be resolved here in the near future. >> the bottom part of that range you mentioned would represent an increase from the current goal, is that correct? >> we are 305 and a 350 would be -- the range that is in discussion is 352,370,000. >> so even if the approval for the bottom of the range that would represent a 45,000 increase, is that correct? >> guess, sir. they are trained and equipped
4:50 pm
rather than our forces in terms of relative costs. i think you both would agree to that, would you? >> yes, sir. >> senator mccain. >> thank you, mr. chairman. secretary gates, did you recommend to the president the date of july 2011 at the date to begin withdrawal? >> no, sir, i didn't. >> to chew, admiral mullen? >> no, i did not. >> on the issue of continued presence in iraq, obviously the casualties have been reduced dramatically, but i think it's also obvious that the iraqi military doesn't have a lot of the technological capability that they need to combat this kind of insurgency that is still out there. it also, if they want to have an air force county seems to me
4:51 pm
they need that kind of technical assistance. a number of other areas of modernization of their forces. and it is necessary -- we are not talking about continued combat operations on the part of the united states, but they do need to kind of take both a sense that they will need to maintain their security. do you agree with? >> yes, sir. >> so are there any discussions going on with the iraqi government concerning the future role of the united states in iraq besides the fact we are now scheduled to leave by the end of the year? >> there've been a number of informal conversations with the iraqis about this. our concern, as i indicated yesterday's print the plea in three areas. intelligence fusion, which is that some maintenance and in air cover and providing the ability
4:52 pm
to protect their own airspace. right now, undercurrents circumstances, as of the first of january, we will have 157 department of defense military and civilians along with several hundred contract is, basically processing foreign militaries goes. and as i'veindicated, i ain't this government is very open to continuing presence that would be larger, where we can help the iraqis for a period of time. i'm not actually concerned about the stability of the country, but i am concerned about their ability to address these three issues in particular. but the fact is we have a signed agreement that president bush signed with the iraqi government and the initiative for this meet to come from the iraqis.
4:53 pm
my hope is once they sort out their new defense minister is going to be, which has been a problem in putting together their government, that then we will be able to move forward with this dialogue with the iraqis. they think it's a little bit frankly, in iraq, a little bit like the strategic agreement itself in the sense that our presence is not popular in iraq. and so, the politicians, i think the leaders understand the need for this kind of help, but nobody wants to be the first one out there supporting it, very much like the security agreement at cells. so we will continue the dialogue, but at the end of the day the initiative has to come from the iraqis. they have to ask for. >> i take it you are pleased that the house's decision on what to shoot color, the additional engine yesterday quite >> the extra engine. >> the extra engine. i take it you would support
4:54 pm
efforts over here and say absolutely. i share your optimism about our success in afghanistan, which has confounded many of the critics. and they also share your view that there is a long way to go. but do you share the same optimism about pakistan's? there's been some various areas disruption obviously with these american citizens who are now being held in prison, the whole role of private contractors, but continued allegations of relationships between the isi and the taliban? i'm deeply concerned about the situation impacted and, which obviously is vital to the sustained and long-term success in the end. >> let me just a word or two can then turn it to the chairman because he spent a lot more time
4:55 pm
in pakistan in the last two years than i have. i worry a lot about pakistan. it has huge economic problems. those problems were significantly aggregated by the terrible flooding last year. they have a serious internal terrorism threat that is seeking to destabilize pakistan at itself. i worry that they might provoke a conflict with pakistan and afghanistan. that said -- >> there is still sanctuary. >> outfit them and there are the sanctuaries, but i will say the pakistanis have 140,000 troops on the order. we are not -- these things improve step-by-step, not as quickly as they would say, but
4:56 pm
we get to a better place over time. if you ask me two years ago the pakistanis would withdraw six divisions in the indian border and put them in the west, i would've said impossible. if you asked me if we begin coordinating operations on both sides of the border with afghan and isaf forces on one side and the pakistanis on the other, i would've said that's very unlikely. and they are chipped away at some of these sanctuaries. it's interesting what they've done and south waziristan and law. it's a mixed picture, and something we need to keep working on it. the chairman has worked at it as hard as anybody. >> on the military side, senator mccain, i am more optimistic. the work we've done with them. but on the political side, the economic side, at least from my days, it looks worse than it has in a long time. so i share your can turn.
4:57 pm
the vector is going in the wrong direction overall for the country. but we are very unpopular they are. you've seen it gets highlighted in each crisis, i mean, we provided extraordinary support for the floods last year, with the military. and that registers than a popular way shortly. given infinite like the one we're going through right now in our popularity is back down to very small numbers. so i do think we have to stay in for lots of terrorist organizations had, not just al qaeda. they are more -- day or more combining their efforts in a cover band, but i do think we have to continue to work on it. imus confirmed as i've ever been. >> thank you. mr. chairman, briefly, anything more on the wikileaks investigation? >> after her last hearing, i went back and had been told that
4:58 pm
i had to keep my hands off of it because of the criminal investigation, but i have been able to narrow and area to bypass the secretary of the army to investigate in terms of procedures and the command climate and one that has nothing to do with the individual -- the accused individual. to see what lapses there were, where somebody perhaps should be held accountable. >> thank you, senator mccain. senator lieberman. senator lieberman. >> thanks, mr. chairman for your service, for your leadership, for your testimony today. i believe that the president's budget for the department of defense is a budget that recognizes the kinds of economic stress we are going through, particularly with regard to our national deficits and debt and meet our defense.
4:59 pm
and i appreciate, mr. secretary, your advocacy of the budget, but also your warning that we've got to be very careful about cutting too deeply into our defense budget. i have noticed some change of terminology around here, which concert maine, which traditionally have we discussed the various components of the federal budget, with regard to discretionary spending, we distinguish between defense and nondefense spending. and the defense spending had a more project to status. and i was very a good reason, you and all of us on the committee believes, which is that we have no greater responsibility in our national government and to protect our security. it is the underpinning of our freedom and our prosperity, so that we have to be

41 Views

info Stream Only

Uploaded by TV Archive on